We live in a world where finding out about a product or service before we buy is usually quite simple. When we are looking at a potential purchase on Amazon.com or other Internet sites, there are star ratings and reviews to read. Want to try out a new restaurant? Try using Yelp or Google Reviews. Hiring a plumber or house keeper? Angieslist is the place to go. But, what about appraisers and appraisal services? There really is no centralized review website for appraisers. In my opinion, that is not all bad, because it is likely that ratings on appraiser and appraisal services would not reflect actual quality of work. Allow me to explain why.
The problem with rating appraisers for their abilities and quality of work is in how appraisals are done and why. The most probable individual to rate an appraiser (either as a praise or a complaint) would be a borrower. Unless they were reviewing him or her strictly on professionalism, punctuality, customer service, etc., ratings from this source may be skewed. Here is why: Appraisals are not written to be easily deciphered by the average homeowner. This should not insult the intelligence of a homeowner, but they are just not written in “layman’s terms”. Due to new regulations, there are codes and terms that must be used in the report which would confuse anyone not familiar with the ‘inside baseball’ of appraisal writing. We pride ourselves on providing great customer service to the individuals whose homes we are appraising, but most are not trained in appraisal reading.
The reading of the report is minor, however, compared to the issue of bias. It is my experience that most homeowners care more about whether the appraiser ‘hit the value’ they were looking for (or needed for their desired loan) than how well the appraisal report was put together. In many home owners’ minds, a ‘good appraisal’ is one that comes in as high as or higher than what they believe their property is worth. If they think their house is worth $320,000 and the appraiser comes in at $315,000, the appraiser is often branded a ‘bad appraiser’ and this is a ‘bad appraisal report.’ Conversely, an appraiser who hits a value of $350,000 must have done a stellar job and deserves the highest of commendations.
What some do not appreciate is that the quality of an appraisal report actually has very little to do with the final value. I perform a fair number of peer reviews each year (looking at other appraisers’ work for quality compliance). The most important criteria I am evaluating is the detail of the subject’s description, choice of comparable sales/listings, supportability of the adjustments, reasoning of the final reconciliation, and how well this was all explained. Final value is backseat to all of these (and stems from them all), and cannot logically be used to determine the overall quality of the report.
I am not suggesting that it would be wrong for a homeowner/borrower to rate an appraiser’s performance, but it should be remembered that a ‘good appraiser’ is not one who consistently comes in higher than the borrower’s estimate of value and an appraisal is not ‘bad’ because it fails to ‘hit the number.’ For more understanding on this or other topics, our office welcomes your comments or contact.