The Appraisal

Over the past year there has been an uproar, so to speak, in the real estate world about the appraisal process. One of the many factors with what went on with the collapse in real estate was the appraisal process. Because of the lack of oversite in the industry, a lot of blame has been brought to the appraisors feet. Some of that is deserved and some of that is not, as there is plenty of blame to spread. The way it used to work, depending on the lender, some lenders had a couple of different appraiors that they would use and assign according to what their specialty was. An example would be that some appraisors specialize in FHA or VA while others are better at just doing good old fashioned Conventional. Some were more hardline to the rules, while others might have been a little more "forgiving" when appraising a property.

With the crackdown in the industry, more and more you are finding that the lenders have no control now over who gets assigned to do the appraisal of your purchase or refinance. Most lenders now have pool of appraisors that randomly get assigned to your purchase or refi. And those that have not implemented that system, from what I understand, will be forced to by May 1, 2009. The positives of this is that the appraisor will not feel pressured now in advance to "hit" the number for the transaction. They can do what their job is designed to do, which is a great thing in my opinion. Here is the only negative that I have ran into so far with this system. When a lender puts together their "pool" of appraisors, they often have several appraisors that might not be familiar with your market due to the wide areas that the lenders cover. We have ran into this lately here in St. Joseph County Indiana. These outside appraisors, because they are not familiar with this particular market, have been shorting most appraisals. A $2,000 to $5,000 short is one thing, but they have been shorting by $10,000 to $25,000 depending on the situation. How I have gotten around this, is that if the property is being financed, I write in the purchase agreement that the appraisor must be affiliated with the St. Joseph county board of REALTOR's. That way I am complying by not choosing my appraisor, but can narrow the field down to someone that I trust is going to do a proper appraisal. You can do this as well if you are refying your home. Don't be affraid to ask the appraisor, when they call to set up the appraisal with you, if they are a member of your local board of REALTOR's. If they say they are not, ask them to reassign the appraisal. You have the right to do that.