Industry group official responds to concerns of low assessments

Complaints that home appraisers are ignoring home appreciation and coming in too “low” on their assessments have become common. So common that it was the topic of a recent Sunday column by nationally syndicated writer Kenneth Harney. According to the piece, those in the real estate business say the issue has led to sunken deals and could hurt the market’s recovery.

At the recent annual meeting of the Appraisal Institute, Ken Wilson, the vice president of the trade group, discussed his take on the issues raised in Harney’s column.

Q: I’m hearing from Realtors the same thing that was expressed in the Harney article. What’s going on?

A: In terms of the word “low appraisal,” that’s a very interesting phrase because what does “low appraisal” mean? It basically just means that the appraised value came in less than a list price or a contract price, and it’s not the goal or the intent of the appraiser to just tattoo a contract price. It’s their intent to be an independent third party, to be objective and to present a document that is fully supportable to a client, which in the context that we’re talking about now, is a residential lender.

They’re not interested in making a transaction close, to see that a deal succeeds for a Realtor; they’re engaged, or hired, to represent the interest of the lender. They’re making a sound business decision in a decision regarding a loan.

Q: So, in essence, it’s not fair for a Realtor to say, “This is our listing price and your value should not have come lower than this.”?

A: That is absolutely correct. There are different motivations that go into a home purchase. One of the biggest things is it’s an emotional decision for both the buyer and the seller.

I’ve been in this business for a very long time. I’ve been a commercial appraiser for the majority of my career, but I started in the residential business. And one of the most interesting, fascinating aspects is, I’ve never met a person whose home was inferior to the next person. So, it’s a very emotional decision and they (the sellers) establish that (listing) price for various reasons. Many times, for accurate, legitimate reasons. But there’s more that goes into it than what the true market value is.

Q: When an appraiser walks into a home, what does that person typically do and look for?

A: The appraiser will come to a property to do a property inspection. That includes both an interior and exterior visit.

They walk through the property. They should spend an adequate amount of time than just looking at the physical features of the property. (They’re looking at) not only the construction components, but also what the condition of those components are as well as what are the acceptable standards.

For the longest period of time, neutral colors have been in vogue with property owners and buyers. You don’t want a house that has, I’ll just pick an arbitrary example, purple carpeting. If that insults anybody, that’s not my intent, but ... if you had a house with purple carpeting, purple walls, that fits your taste and style, but that doesn’t mean that’s what the market wants. So that’s what an appraiser is looking for. It’s not the appraiser’s intent, nor should it be, to set the market. It’s to interpret the market.


