You would think that with a continuing historic low of only 322 residential listings for sale in MLS last week that an appraiser should not have any difficulty in meeting the agreed upon sale price that has already been established between the buyer and seller. But, unfortunately, that does not always occur and buyers and sellers are forced back to the negotiating table or the transaction fails with everyone walking away unhappy and frustrated.
During the last real estate recession, there were a lot of accusations of collusion between mortgage brokers, real estate appraisers, realtors, buyers and sellers. Some properties were sold low and resold for a higher price within a few hours, days or weeks with purported kick-backs to those involved. As a result, appraisals are now ordered by independent third parties that are not affiliated with mortgage brokers or realtors. New appraisers are also now required to have at least a two-year college degree and must also go through an internship program working for a licensed appraiser for up to two years. During that time, their work is supervised by a licensed appraiser in the state of Alaska. These licensed appraisers in Alaska are all on a blind rotation list and when their name goes to the top of the list, their turn comes whether or not they are familiar with the type of property to be appraised unless they inform the lender that they wish to decline the order due to lack of experience which rarely happens. A little known fact is that the State of Alaska has reciprocity with several other states regarding the qualifications of an appraiser. Thus, an appraiser from another state, if they are on the approved list, could end up doing an appraisal in Anchorage without even being a resident of the state and with limitations of understanding the local market.
Although your realtor can not unduly influence the appraisal process, we have found it to be beneficial to ask the appraiser some questions when he/she calls for access to the property for inspection. We thank them for calling and tell them we’re looking forward to working with them. Then, we ask if they are a member of the Alaska Market Data system which is a data collection organization that reputable appraisers subscribe to in order to share information. The membership is not free and appraisal companies pay $10,000 per year to be a member plus monthly dues. You can check out whether an appraiser is a member at www.amdsnetwork.net. We also ask if they are a resident of the state of Alaska which ensures that they have some general market knowledge. We also inquire if they are a non-MLS member. This membership allows them to research MLS information about active, pending and sold properties. We also ask if they are familiar with the geographic area or price point of the property to be appraised.
A realtor can’t disqualify an appraiser if they answer no to any or all of these questions, but it puts the appraiser on notice that they are dealing with an informed seller’s representative and if they are uncomfortable may elect to voluntarily decline the order. With today’s historic low inventory and buyers scrambling to find a home to purchase, it would seem unreasonable for an appraiser to miss an agreed upon purchase and sales price for a few thousand dollars but that occurs more frequently than one might think.