Tips for Consumers:
What Consumers Need to Know About Real Estate Appraisals
Appraisers have been wrongly accused of prolonging the nation’s real estate downturn by developing value opinions that are below proposed sale prices. Specifically, they’ve been unfairly criticized for including comparable sales in the valuation process that provide opinions that are below the cost to build. Others, including some real estate agents, mortgage brokers and home builders, have used the Home Valuation Code of Conduct and Interagency Appraisal and Evaluation Guidelines as a scapegoat for natural declines in the real estate market.
Credible and realistic value opinions help to stabilize real estate loans and investments, which promotes socially desirable real estate development. Appraisals are particularly valuable because they are an objective and unbiased source of real estate information. Unlike some other real estate professionals, the appraiser performs a professional service for a fee rather than for a commission contingent on the value conclusion, the approval of a loan or the eventual sale of the property.
To help consumers understand the role of appraisals in the lending process, the Appraisal Institute offers these helpful tips.
As the nation’s largest professional association of real estate appraisers, the Appraisal Institute created the helpful tips to let consumers know how to protect themselves and how to avoid unnecessary frustration when selling or buying a home.
"Too many consumers in this struggling real estate market face problems with appraisals when attempting to buy or sell a home," said Appraisal Institute President Joseph C. Magdziarz, MAI, SRA. "But rather than passively endure delays in closing a sale, homeowners and buyers can take proactive steps to avoid pitfalls."
The Appraisal Institute’s tips encourage homeowners and buyers to:
Magdziarz noted that normal declines in the real estate market have led to increased caution by lenders. That caution has led to delays in completing some real estate transactions.
"Appraisers today are doing the same thorough, fact-based research and analysis they have always done," Magdziarz said. "Nothing has changed in that regard."
Magdziarz added that appraisers have been wrongly accused of prolonging the nation’s real estate downturn by developing value opinions that are below proposed sale prices. Specifically, he said, they’ve been unfairly criticized for including comparable sales in the valuation process that provide opinions that are below the cost to build.
It serves neither the lender nor the consumer to enter into an upside-down mortgage, he noted. Some real estate agents, mortgage brokers and home builders have used the Home Valuation Code of Conduct and Interagency Appraisal and Evaluation Guidelines as a scapegoat for current declines in the real estate market caused by the weak economy and the general oversupply of homes in the market, Magdziarz said.
The Appraisal Institute is a global membership association of professional real estate appraisers, with more than 24,000 members and 91 chapters throughout the world. Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state and local laws. Members of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA and SRA designations. For more information regarding the Appraisal Institute, please visit www.appraisalinstitute.org.
Mark Raney Appraisals LLCResidential Appraiser
Albuquerque-Rio Rancho Appraiser, Education & Experience at Your Service.
12231 Academy Rd NE #301-269 Albuquerque, NM 87111Phone: 505-856-9894 Fax: 505-856-9898