Most Realtors don’t understand how an appraisal is done

Editor,

I wanted to comment on your article in which Realtors are quoted disparaging appraisers for using short sales and REO properties as comparables. I have been a real estate broker/appraiser since 1985 and, to date, have met very few Realtors who truly understand the appraisal process, including USPAP guidelines an appraiser must follow and the methodology used in selecting comparables. Even more important is the appraiser being able to justify why some comparables were used as opposed to others in their report.

I cannot begin to tell you how many times our office has received a call from a Realtor who challenges an appraisal because the comparables were not selected based on sale value rather than similarity to the subject. A golf course view is not the same as the view of the side of your neighbor’s house, any more than a sale 12 months ago is reflective of current market conditions.
 
As a part of my appraisal business, I review the work of other appraisers for lenders, and I feel confident saying the pool of appraisers who are able to write a report that comprehensively explains how and why they selected the comparables is growing shallower by the day. This is not because appraisers have gotten lazy; it is because fewer and fewer qualified appraisers are willing to take a 50 percent cut in pay to do work for an appraisal management company (AMC).

Rather, those appraisers are exiting the profession and using their skills in a way that allows them to make a reasonable living, or are simply sitting back and waiting for this phase of AMC domination to pass.
 
William G. Kelly
Residential Research & Valuation
Trinity