Getting the Most for Your Appraisal Buck
by Charlie Elliott, Jr., MAI, SRA

Lately, some in the mortgage lending industry have expressed frustration over what many consider to be inconsistent service from appraisal vendors. What options do the mortgage lenders have in dealing with what some consider a sellers’ market for appraisals? A look back at the evolution leading to today’s appraisers may provide a better understanding of what one may encounter when dealing with appraisers.

Historically, the appraisal field has been controlled exclusively by the client, usually a lender. Clients controlled where the business was directed as well as the all-mighty purse strings attached to each assignment.

Over the past couple decades, the appraisal profession has been evolving from one tightly controlled by appraisal companies, owned and operated by designated appraisers, to one open to individual appraisers, who have received a state appraisal certification, the new ticket to entry to the game of appraising. As this transformation has occurred, the market, in some cases, has been flooded with an oversupply of newly qualified appraisers. This was the case especially in the major population centers where there were more appraisers and where an appraiser can do work much quicker and cheaper. Many appraisers, therefore, found themselves short of work, especially when the market was slow.

Given the forces of supply and demand, appraisers frequently found themselves willing to bend over backwards with the whims of the clients in order to put food on the table. This is not to say that appraisers, in general, did not and do not expect to provide clients with good service nor that they expect to be so independent that they are above accountability. It is to say that some clients found themselves making unreasonable demands of appraisers because they were in a position to crack the whip.

Today, the circumstances have changed. In recent months appraisers have found themselves with more clout, due to a number of factors not the least of which is the boom lending market fueled by low interest rates. Many appraisers have found that they simply cannot keep up with the heavy workload and are not taking on any new clients. Furthermore, recent tighter government controls over appraisal certification, resulting in a slower rate of entry into the market has taken the “bloom off the rose” for some clients prone to exercise undue demands on appraisers. Appraisers as a group have come into their own in recent years after having a number of years of experience and seasoning under their belt, permitting them to operate more on a level playing field with those who employ them.

And then there is the issue of lender pressure on appraisers whereby, in some cases, the lender clients have left the appraisers with the subtle understanding that, if they do not hit their number, the spigot which carries the steady stream of business will be slowed to a trickle or shut of completely. Lenders using such unethical practices have come under a new level of scrutiny, forcing them to back off and allow the appraisers the flexibility to do their jobs without coercion or undue pressure.

These events have given appraisers a new freedom to practice their profession more independently and more under their own terms. This is not to say that the appraisal profession has passed the boundary of accountability, but it does say that there is more balance in the appraiser-client relationship than in the past and that clients generally are bound to treat appraisers with a higher level of respect.

Given this new service environment, it likely that many clients are finding that their relationship with their appraisal vendors is more one of a negotiated one than that of a forced one. This is and will be an ebb-and-flow environment and, depending upon the time, location and specific needs of the client, it may be more or less of an issue. Given this new independence processed by the appraiser, how does the client insure that his appraisal vendor continues to serve his interest? How can he be sure that he receives the loyalty and attention of the appraiser?

With this in mind, I have listed five needs of the appraiser. Most or all of these needs must be met in order for the appraiser to be happy with the relationship. The clients, who can successfully address these needs, will improve their chances of having a successful relationship with the appraisal vendor.

1. Fair Compensation
   Appraisers are going to be happiest when they earn a fair fee for their efforts. A fee a few dollars above the market price will go a long ways toward greasing the wheels.
    

2. Prompt Payment
   Appraisal fees should be paid the appraiser on an agreed upon schedule. The maximum period an invoice should be outstanding is 30 days. Payment at or around the time of delivery will help endear your appraiser to you and your organization.
    

3. Consistent Work Volume
   The client providing the appraiser with a consistent flow of work will increase the chances of obtaining and retaining his or her attention, loyalty and trust. The quality of work is also important. The client who always places only the difficult orders is not on the top of the appraisers list.
    

4. Professional Respect
   Appraisers value relationships whereby they are treated with the same respect the client would expect to be treated. Sugar attracts more bees than vinegar.
    

5. Ethical Treatment
   An appraiser’s livelihood is dependant upon his or her conforming to the ethical mandates in the Uniform Standards of Professional Appraisal Practice (USPAP). Issues relating to the client’s expectation of an appraiser providing an appraisal based upon a predetermined value or direction of value should be avoided. Any request that pressures the appraiser to provide a misleading or misunderstood product should not occur.

While there are and will be many issues that arise which will try the patience of the appraiser when dealing with the client, those listed above are considered to be the most significant. Even though some appraisers may display traits of “in-human-ality” from time to time, they basically have the same human needs as the rest of us, and the list above should be treated as a base recipe to start with. A heavy dose of people skills thrown in as needed will help ice the cake and “an at-a-boy” or “at-a-girl” on the proper occasion can be worth its weight in gold.

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.