Apprasial Reviews

With today's market condition's more and more appraisals are getting reviewed. According the National Association of Mortgage Brokers about 50% of all appraisals will get reviewed at some point either at the origination stage or when its sold in the secondary market.

Big lenders like Chase, Citi, Flagstar, Wachovia, Countrywide, ING and Provident do some form of review on every single appraisal at the origination stage. It may be as simple as utilizing a website like realquest, sitexdata, realtor.com and yes even zillow or as extensive as a desk review, field review, sending it to a collateral risk analysis or requiring a second full appraisal.

When a review is done its usually never a good thing; why? because the review is always looking for what's wrong with the appraisal as opposed to an accurate independent judgement of the property. Secondly its allot easier to figure out what another appraiser did wrong as opposed to what you would of done initially without the aid of the previous report.

As my father Timothy Coester put it "its like playing cards where the other player already knows your hand".

I use to work for Wells Fargo as a review appraiser and we were specifically instructed to try and find whats wrong with the appraisal and see if a lower value was justified, and since the appraisal is an opinion how easy is it to have a different opinion then someone else?

This becomes even a bigger problem when the property is in a rural area or is an odd property such as a home with a mother in law suite, a renovated home or in an area that has values at various price points which is typically seen in heavily developed metropolitan areas or markets going throughout a faze of gentrification such as Washington D.C, Baltimore, M.D. or Philadelphia , PA. The reason it poses a problem is because the opinion is so subjective to the opinion of the appraiser and the opinion of the reviewer. You could essentially have difference of opinion of $50,000 and both appraisals look the same on paper.

So what can an appraiser do to help the review?
It is imperative to have the appraiser take the time to explain everything in the appraisal fully and to properly. The days of the appraisal with three comparables are over. In today's market a minimum of 5 comparables is necessary preferably 3 sales 1 contract and 1 listing, why is this necessary?

Because the appraiser should present such an overwhelming argument that the review appraiser double thinks even questions the value because the original argument was so overwhelmingly accurate its inconceivable to justify a lower value.