Who Should Hire the Real
Estate Appraiser and Why?
By: John Harris
Everyone involved in the sale of real
estate has a vested interest in the results of a real estate appraisal. The
outcome affects the seller, the buyer, the lender, and even the realtor.
A too low valuation of the property by the appraiser could mean a seller
must lower the asking price. For a lending officer, it could mean a lesser
commission or none at all. A too high valuation means the buyer could be
paying more than the property is worth. For the realtor, his/her commission
could go higher or lower, which is based on the purchase/sell price of the
real estate.
An appraiser, who should be licensed by the state, performs the real estate
appraisal. It is best to hire someone local with years of full-time
experience in order to get a more accurate appraisal. The appraiser and
appraisal are governed by the minimum standards, published periodically in
the Uniform Standard of Professional Appraisal Practice by the Appraisal
Foundation. The Foundation is chartered by Congress.
The recent real estate bubble, unfortunately, brought problems for
appraisers and many involved in real estate transactions. According to
Realty Times in their April 2006 issue, appraisers have been routinely asked
by lenders to inflate real estate values to keep up with the ever-rising
real estate market. One real estate appraiser in San Diego quit and turned
in his license to the state, after being fired three consecutive times for
refusing to inflate his valuations. Now, real estate appraisers across the
United States are under a microscope from federal financial regulators and
Congress.
The real estate appraiser may be hired by the seller to determine an
accurate selling price or by the buyer to ensure the accuracy of the
purchase price and mortgage; but generally, the lender does the hiring or
uses their own in-house appraiser. Though buyers may assume the lender has
their best interest, mortgage lenders have their own best interest at the
forefront, especially some not-so-scrupulous lending officers who may be
targeting a higher commission.
If I were a seller, I would hire my own real estate appraiser to ensure I
was getting the most for my property. As a buyer, I would put the money out
upfront to hire an independent and objective appraiser with no connection to
anyone within the real estate transaction. This ensures that I do not
contract for a mortgage, based on an inflated appraisal valuation, that will
give me a new home with a lower or negative equity. The lender still may
require a different appraiser.
If five different real estate appraisers evaluated the same property within
the same timeframe and under the same conditions, it could result in five
different and varying real estate valuations. Why? There is no set checklist
or established value for each property feature and amenity. Though
appraisals are based on prescribed standards, it is a subjective process.
If there is more than one real estate appraisal and they disagree
significantly, you have options. If the value is too low for the seller,
renovations may raise the value — or you can decline to sell. If the lender
insists on its appraiser’s value, which disagrees with your real estate
appraiser’s value, as the buyer you can look for financing elsewhere — or
decline to purchase the real estate. There also is the option to bring the
appraisers together to come to a common agreement on the value.
Remember, the person looking out for your best interest is yourself. Ensure
the appraiser in your real estate transaction is reputable, objective with
no connections to anyone in the transaction, local and experienced.
About The Author
John Harris is an expert researcher and writer on real estate topics such as
economics, credit improvement tips, home selling advice and home buying
preparations. For more on San Diego Homes for Sale visit
http://www.twtrealestate.com.
.
[Internet-Marketing-One.Com]
