Entry 2304.1 - Why the "Appraisal Package" Is So Critically Important to Broker's & Their Sellers...

Why the "Appraisal Package" is so critically important to broker's and their seller clients

As I stated in my previous Blog Post about communicating with appraisers (Can I talk to an Appraiser), there is NO prohibition against real estate brokers contacting and “talking” to the appraiser. However there are clearly topics and facts that the appraiser CANNOT discuss or share with anyone other than the appraiser’s client (typically, the LENDER). Therefore, “when is more critical than what, ... to talk about”.

So, to help brokers and their seller clients effectively communicate with appraisers, the best practice is for brokers to develop an “Appraisal Package” for each and every listing that is subject to an appraisal (residential , land or investment property). Making the “Appraisal Package” available to the appraiser no later than when the appraisal inspection is scheduled is key to the brokers opportunity to tell the unique story about the property that is the subject to an appraisal, and best serve their client by doing so.

I wrote an article for the National Association of REALTORS®, explaining when it was appropriate to communicate with appraisers in the fall of 2010 after Congress passed Federal Legislation (Dodd-Frank), where I testified to the Appraisal Subcommittee (a subcommittee of the FFEIC, which is the Federal Agency who oversees all Federal Financial Institutions). I specifically noted the ongoing need to communicate with appraisers is significantly beneficial to the appraisal process facilitating facts and data about a property which is subject to an appraisal. From that set of testimonies, Dodd-Frank incorporated certain circumstances, including communication with appraisers is clearly appropriate, stating:

“The requirements .... shall not be construed as prohibiting a .... real estate broker, ... consumer, or any other person with an interest in a real estate transaction from asking an appraiser to undertake 1 or more of the following:

(1) Consider additional, appropriate property information, including the consideration of

additional comparable properties to make or support an appraisal.

(2) Provide further detail, substantiation, or explanation for the appraiser’s value

conclusion.

(3) Correct errors in the appraisal report.”

The most advantageous time to interact or communicate with an appraiser is when the appraiser is in the process of inspecting and developing the appraisal report, not afterwards. It is critical to understand, this window of opportunity is EARLY in the process and only provides the broker and the seller a limited chance to convey the unique knowledge about the property to the appraiser that puts the property in the best position for the most favorable appraised value outcome. This is now the “New Normal”.

The next question is critically important, “What to put into the “Appraisal Package” ?

The above does not constitute Legal Advice. Therefore, find a competent attorney for legal advice.