Q1: Does an appraiser have a typical day?
A: An appraiser’s workday is anything but typical. On any given day, an appraiser will be inspecting properties, conducting field research at town halls, taking comparable sale pictures, and then returning to their office to prepare and complete the written report. An appraiser might also receive new orders from their clients, respond to client questions, and call homeowners and REALTORS® to set-up appraisal inspections. Many appraisers also perform non-mortgage work such as commercial appraising, right-of-way appraising, estate work, or expert witness court testimony.
Q2: How long does it take to become an appraiser?
A: Massachusetts state law follows regulations provided by the Appraisal Foundation and the Appraisal Subcommittee in accordance with federal law established in 1989. Applicants must hold at least an associate degree (or have completed30 hours of college-level courses) and have completed 75 hours of approved appraisal education in advance of gaining an appraisal trainee license. Once this has been achieved, the trainee appraiser must complete an additional 150 hours and 2,000 hours of appraisal experience within a two-year period under the supervision of a Certified or Certified General appraiser to become licensed. In addition, an appraiser must learn how to actually appraise properties with field inspections and data research, learn how to work with all participants in a transaction, learn appraisal software programs, and eventually, if they go out on their own, learn how to run a small business!
Q3: Can a REALTOR® speak with an appraiser or provide an appraiser with any sales information?
A: Absolutely! There is a lot of misinformation out there about this point. The Dodd-Frank law regarding Appraiser Independence only prohibits any participant in a mortgage transaction to “pressure” an appraiser regarding the appraiser’s value opinion. That’s it. REALTORS® are an important part of a sales transaction and the appraiser should speak with you to get vital information about a property and market data. Appraisers and REALTORS® should work together to provide the best service possible to their respective clients.
Q4: What are the most common causes of a home not appraising?
A: There can be several reasons why an appraiser’s value opinion is not the same as the agreed-upon sales price. Probably the most common reason is uninformed buyers. In a fast-paced, increasing market, a buyer may feel they need to offer a price that is much higher than what the market supports. In my experience, most residential transactions do close even when the sales price and the appraised value are different. This typically occurs through additional negotiation between buyer and seller and their respective REALTORS® or the buyer contributing more cash to the transaction. In many cases, a “low” appraisal may be just one of a number of items that may cause a sales transaction not to close.
Q5: How much does the local market come into play when doing an appraisal?
A: The local market always comes into play when performing an appraisal. As you know, real estate is all about location. In many areas, there are sub-markets within towns, neighborhoods, and even block-by-block in locations such as downtown Boston. A qualified and experienced appraiser will have learned this while reaching out to local REALTORS® and other experts to learn about the market in which they provide their services. It’s a never-ending learning process.
George K. Demopulos, MRICS, RA, SRA, AI-RRS President & Chief Valuations Officer, Lincoln Appraisal & Settlement Services. He is one of the founding partners of Lincoln Appraisal & Settlement Services (“LASS”), a multi-state appraisal management company, and Lincoln Abstract & Settlement Services, a multi-state title and closing company based in Providence, RI.