Ten Things to Know When Selecting an Appraiser or Appraisal Company
By Charlie W. Elliott, Jr., MAI, SRA

How does one decide whether or not an appraiser or an appraisal company can cut the mustard? Below are two lists of issues, which may be considered guides for those, choosing appraisers, or those, choosing appraisal companies. Each list was compiled with the consideration that appraisals are ordered directly from appraisers or appraisal management companies. While much of the criteria are the same there are differences, and they are acknowledged within the lists.

Appraiser

1) Can the appraiser provide a current copy of his or her state appraisal certification? All appraisers should be certified by their state. This is usually updated annually or bi-annually and is verifiable by a fax copy of the current state certification. There is no way around this one; do not accept less.

2) Does he or she have a recognized appraisal designation? Beware of organizations offering designations, which require little or no demonstration of competence. Some of the more popular designations from responsible organizations are ASA, IFA, MAI, SRA and SRPA.

3) Can the appraiser verify errors-and-omissions insurance coverage? A copy of an appraiser’s E & O insurance declaration page, will demonstrate the appraiser’s commitment to addressing liability issues associated with his or her work.

4) Can the appraiser provide references? References may prove to be an effective way to evaluate an appraiser’s competence, particularly if there are questions about the appraiser’s experience with other clients.

5) How many appraisals did the appraiser produce within the past year? A professional appraisal staying abreast of the local market should be active. Professional appraisers on top of their game will produce a minimum of 100 appraisals per year; some will produce hundreds.

6) Is the appraiser able to provide work product samples? Copies of the appraiser’s work product should provide a good idea of what the appraiser is capable of producing. Don’t be surprised if names, clients and property addresses are blotted out. Appraisers are ethically bound not to disclose confidential information.

7) Does the appraiser have a Web site? Is the appraiser Internet-able and capable of shipping product electronically? In today’s market a serious appraiser will have access to the Internet, be capable of communicating by e-mail and able to transmit product electronically. This issue is a good litmus test as to the appraisers “get up and go.”

8) Has the appraiser been the subject of legal, ethical or competency complaints? This may be a signal of problems to come. State appraisal regulators will be able to provide a report of any violations on their records, usually for a fee.

9) What is the appraiser’s turn time? Get specifics. “We run them in the front door and right out the back” is too general. Is there a prompt response to inquiries for service? If there is not a prompt response to an order or inquiry, this is a bad sign. Steer clear of the appraiser.

10) Will the appraiser work for a reasonable fee? Many appraisers will work cheaper if they have reason to expect a steady volume of work. A little haggling may be in order here.

Appraisal Company

1) Does the company have errors-and-omissions insurance? Any company worth its salt will have E & O insurance. Some individual appraisers may not, but a company that does not have professional liability insurance should be avoided.

2) Does the company offer service regionally and/or nationally? An appraisal company not able to offer service at least regionally, if not nationally, has little to offer over that of an individual appraiser.

3) Does the company have a competent review staff? Part of the responsibility of an appraisal company is to provide review service on the product it produces.

4) Has the company been the subject of recent legal action? Companies and individuals managing companies convicted in cases involving unethical business practices should be avoided. A bad credit rating is also a red flag.

5) What is the company typical turn time? Does the company have an order-entry and tracking system? Most professional appraisal companies have some form of Web-based system in order to meet the industry’s demands for quality service.

6) Is there a reachable and competent customer service staff able to handle orders and provide follow-up service? The phrase, “I would fire them if I could find them,” may lead one to the proper conclusion here.

7) Does the company ship appraisals electronically? An appraisal company, which is not capable of shipping product electronically, should not be considered a serious player in today’s appraisal environment.

8) What clients does the appraisal company work for? A serious appraisal company should be willing and able to present a list of active clients, which it serves. Ask for such a list.

9) How many appraisers is the appraisal company affiliated with? Does it have a sufficient staff of qualified people to carry out the responsibilities assigned to it? A national appraisal company should have a large database of appraisers. Does the company have a responsible appraiser approval-and-removal process?

10) How much will they charge? There is always the question of the fee. A good rule of thumb is to stay in the middle. The highest and the lowest fees are oftentimes equally suspect. Then there is the situation where the fee is high, but it is the only reasonable alternative given the very narrow array of options. Going with the higher fee here is usually best.

One question that always comes up is: “How do I get answers to all of these questions?” The obvious answer is to ask the provider. It may not be necessary to ask for answers to all ten questions depending upon the prospect. Sure, some of the information may be subject to question, and the old adage, “let the buyer beware,” is certainly one to consider. Sometimes an old fashioned “gut feeling” may be the final determining factor, but a little information never hurts. Perhaps, even after a bit of due diligence, a trial run is in order, preferably with a deal that won’t make or break the bank. Good old first-hand experience, in the end, will serve as the best research tool.

Charlie W. Elliott, Jr., MAI, SRA, is President of ELLIOTT® & Company Appraisers, a national real estate appraisal company. He can be reached at (800) 854-5889 or at charlie@elliottco.com or through the company’s Web site at www.appraisalsanywhere.com.