LaPlante Appraisals' Blog

I just want to put it out there, no one is perfect. 

As a homeowner, agent or borrower, sometimes you may disagree with sales used  and/or opinion of value in an appraisal report. Each individual party is looking at different aspects of the transaction and represents different interests. Most agents have tried at least once, to send in a Reconsideration of Value (ROV). Agents have a variety of experiences with these, some good, some bad. We'd like focus on what makes a good ROV. 

Fist off, the point of an ROV is to provide ADDITIONAL information that was not included in the original report--most commonly: improvements and/or sales/listings. 

When submitting a ROV, please considered reviewing the report beforehand. Many times we received a ROV with sales that are already included in the report. Most lenders will review the submitted ROV to make sure this is not the case. However, we do understand as the seller, you do not get a copy of the appraisal report unless the buyer provides you with it. Sometimes an agent or seller will complain the appraiser "rejected" the ROV. As appraisers we are required to review ONE ROV per assignment if asked. If your ROV was not addressed, it was likely turned down by the underwriter or lender--not the appraiser. 

Most of the time the appraiser and the agent/borrowers are looking at the same information sources. However there are times, that due to how things are labeled or listed in the MLS listing site, they did not get pulled in the appraiser's initial research. Therefore there are times that additional sales do make it into the report and values can change. But sometimes the additional sale(s) do solidify the original opinion of market value. 

One of the most common challenges we find in the Maricopa County is real estate agents listing the GLA including the guest house square footage. For example, let's say an appraiser is pulling sales with a square footage between 3,600sf and 4,200sf. Take a look at the MLS listing below: 



One would assume the GLA doesn't include the guest house, however upon further research (calling the agent, assessor records, sketch, etc.) it is determined the comparable is actually only 4,072sf and the guest house is 409sf. Therefore this could potentially be a comparable, however was missed in the appraiser's research of 3,600sf and 4,200sf due to the agent including the guest house in the GLA. See Monsoon/Assessor image below. 



Another thing to remember: although you think a sale is comparable, doesn't mean it is. Appraisers go through a lot of training and classes, analyzing data differently than some real estate agents. Just because you think it's comparable doesn't mean it is in the appraiser's mind. If you happen to have any further questions about how we analyze data and determine market trends, we would be happy to sit down and talk to you about it. Reach out to us here. We are passionate about appraisals and analyzing data to create the most credible and supported report. 

Just know, even if the appraiser does not make changes to the value, you have a right to ask and pay for another appraisal. Yes it will cost you, and could potentially delay closing, but there is a chance another appraiser determines a different opinion of market value.  You have choices. 

Just remember...no one is perfect. 
 

Many people we interact with do not fully understand what an Appraisal is. The audience of this blog is for the public--those who are not familiar with the ins and outs of the appraisal process.

First off, houses are expensive, and the average person doesn't have $400,000 to $1,500,000 of liquidated cash to buy a home. That is where a loan and the bank come into play. Money is borrowed in order to make the purchase. If a person was to lend a friend a large sum of money, they would want to make sure the person is able to pay it back. The person would not want to lend more money than what the item is worth. Let's say if for any reason, the person wasn't able to pay the loan back, the loan originator would not want to lose more than what the item was worth.

This is how the bank sees the loan and home buying process. A bank will lend you money to make your purchase, however they want to know they aren't lending more than what the home is worth. This is where the appraiser comes in. Appraisers are to appraise a house as a non-biased opinion (not working for the owner nor the bank) in order for the lender to make an educated decision on how much money they will lend a borrower. 

If for any reason the borrowers passed away suddenly, the bank would repossess the property. In this case, the bank wants the home to sell as fast as possible so they can get their money back. If they can't sell it due to deferred maintenance and major deficiencies, then the bank is losing money.  This is why banks require certain repairs be made and rely on a detailed appraisal report. Yes, you own the home, but not free and clear since you are borrowing their money. Borrowing money from the bank allows them to dictate your terms. 

This is something we get push back on, as appraisers, often from the borrowers. "This is my home, and I don't want flooring in the home" or I don't mind a broken window" or "I can manage that leak in the roof-it's not that bad." While this might be the case, if you are trying to refinance or pull money out and need help form the bank, then they have the right to set terms that repairs need to be made before they lend you money.

As appraisers, we are determined to provide credible, detailed reports for our client in order to help them make the best decision possible. Whether that is:

*Loaning money
*Deciding if it makes sense to invest $50,000 in upgrades in order to sell the home for a higher price
*What the fair market value is verses the value at the date of death, in order to determine capital gains and losses, or even
*What a fair buy-out price is for a set of partners separating a portfolio or real property 

Real Property ownership is a very important and a valued part of the American lifestyle. We, at LaPlante Appraisals, take our work seriously and have pride in the results we produce. Don't forget to come back next month, the next blog will be about the appraisal process (inspection & report writing).  

What does it take?  

Many people do not know what it takes to become an Appraiser. What qualifications, education, experience, and background are required. A vision of LaPlante Appraisals is to educate the public on the appraisal process and what goes into an appraisal. By doing so, we hope to grow the public's trust in our profession as an Industry. 

First off there are different types of Appraisers. What LaPlante Appraisals specializes in is Real Property Appraisals. Within Real Property Appraisals you have three different professional career paths 
Licensed Appraiser
Certified Appraiser
Certified General Appraiser Each of these professional career paths listed above require you to have a background check, US citizenship, log experience hours and complete various hours of education. State appraiser regulatory agencies are required to implement real property appraiser licensing and certification requirements. Thus, each state has their own requirements. 

Although you need to find an Appraiser to train and learn from, there are additional ways to get the experience such as through PAREA. The Appraisal Foundation Appraiser Qualifications Board adopted the Practical Applications of Real Estate Appraisal (PAREA) effective January 1, 2021. PAREA makes it more attainable to receive the training and hands on experience to become an Appraiser due to certain limitations the industry creates. 

Interested in a profession as an appraiser? Feel free to reach out to us and we can provide any additional insight and resources you may need.