Appraisals are a part of real estate investing, especially if you or your buyer needs bank financing. Appraisals can be crucial – they can easily make or break the deal.
Several years ago banks, when ordering an appraisal, could often select the appraiser they wanted to do the job. This often ensured that the appraiser knew both the customer and the market they were working in. Unfortunately, it also let a few bad apples inflate prices and be less than honest with the appraisal.
Today when a bank orders an appraisal the request goes into a pool and the next name on the list gets the job; there is really no more say in who will get the job. So while this may have cut down on fraud, it has definitely increased the chances of getting an appraiser that does not know you, what you do, their job or the market. They could even be from the next town over and never have stepped foot in your neighborhood. While many may think this will translate into a fair and honest appraisal (sometimes it does), my experience has demonstrated that the lack of local knowledge is detrimental.
Related: BP Podcast 007: Making Appraisals Work For You with Ryan Lundquist
So even though you have done your homework, found and developed a good real estate deal, understand that you can be left to the luck of the draw when it comes to an appraisal. There are however some things that you can and should do to help achieve a favorable outcome.
- Show Up! – It does not matter if you are buying or selling – you need to show up to the appraisal and meet the appraiser. Be nice, friendly and helpful. Build …read more