I'm a husband, a father to six girls, and an SRA & AI-RRS designated real estate appraiser at Riverfront Appraisals, LLC with offices in Owensboro, Kentucky and Tell City, Indiana.
We’ve been exploring several frequently asked questions in this blog series, and most come to me from Realtors, lenders, or homeowners. This question is a tricky one, in that it usually comes from Realtors who don’t want their question to be made public. The conversation usually goes something like this:
“Hey Ryan, I have a listing and the bank chose Tim for the appraisal (no, I don’t know an appraiser named Tim.) Can I get the bank to reassign this? I don’t want Tim anywhere near my listing!”
So as you can see from the question, I’m not talking about having a second appraisal completed on your home if you aren’t pleased with the first. No, the topic of this post is if it’s ok to ask the bank to change appraisers, or to simply not use a certain appraiser in the first place.
In my research for this post, I came across the same question, framed slightly differently, this time from Reddit:
The individual asks, “I want to sell a house of mine and I would like to avoid a certain appraiser in my area. I know that the lender goes through a process that randomly picks the appraiser for the buyer. But if they select the one I don’t want, is it possible to refuse him to do the appraisal?”
Ready for the answer?
The answer is no. No, you cannot simply ask for a different appraiser just because you don’t like the appraiser who’s been assigned. Or because he’s always low. Or because she’s always picky. Or because you just don’t get along with him.
Before we go any further, I want to say a word about interference. No, we’re not talking sports here. We’re talking about a Realtor or a homeowner interfering with the appraisal selection process. Consider this situation that happened just last week.
I received an appraisal order on Wednesday. The very next day, my office manager reached out to the listing agent via text. No answer. The next day, she sent another text. No answer. We were trying to schedule the appraisal for the following Friday. The due date was the next Monday, so I had the weekend to write up the report. After the texts weren’t returned, our office manager called the agent – who we’ll call John. Finally, after multiple attempts to reach John, he called back. And he was mad. Mad that we couldn’t get to him for ‘two weeks’ as he said (even though it was only one). So he said he was going to get the appraisal reassigned.
Fast forward to the next Friday, and the lender informed us that we still had the order and they wanted us to proceed. They weren’t going to reassign the order. The system was working. So we did the appraisal, and turned in the report. Not without other difficulties with John, but that’s just the kind of guy he is. It turns out he was also the owner of the home. Oh – and did I mention he undersold the home by $15,000? Yikes.
Notice I said that the system was working. What I mean is that there are checks and balances in place to maintain appraiser independence. Just like that Reddit poster knew. Most mortgage companies put appraisers on a random rotation, and in many cases, the loan officer doesn’t even know who the appraiser is. That’s the system working. That’s maintaining appraiser independence. Now, as with all systems, sometimes they work and sometimes they don’t. Sometimes, a bank or mortgage company will fold to the demands of a homeowner or Realtor. There’s a builder in my hometown – we’ll call him Richard – who for whatever reason, hates my guts. No really. I’ve appraised his home once, and since then, I’ve received two orders over the years to appraise his home again. Both times, he says ‘Nope. Not gonna happen.’ And then there’s the Realtor who thought way too much of themself and told the owner of a mortgage company that they’d take their business elsewhere if they continued using my company. In both instances the lender caved. And in both instances, a great ethics violation was committed.
So if you’re a Realtor, you need to be extremely careful about trying to get an appraiser kicked off an assignment, as many people much smarter than me – including the NAR itself – state that such activity constitutes an ethics violation.
A few years back, there was a fairly public case in which a Realtor allegedly barred an appraisal company (Metro West) from appraising any of her listings.
A representative for the appraisal company wrote “We got a favorable reaction from Sehar Siddiqui, the NAR’s regulatory policy representative, who got up at the [NAR Appraisal Summit] meeting and reminded members that it’s an ethics violation to interfere with the appointment of an appraiser.” “Our grievance was that a certain agent was actually naming an appraiser and telling other realtors ‘don’t have this company appraise your listing.’ That’s an egregious ethics violation that strikes at the concept of independent selection, which is in the Dodd Frank regulations. An agent cannot, as she did, say ‘We respectfully decline Metro West.’ If there were an issue, the agency could communicate that to the lender, showing material deficiencies; the lender could then do an audit and see if it’s justified. But that’s up to the lender, not to the agent.”
So it’s not as easy as simply saying “Oh I have a conflict of interest” as some have tried to do. At least it shouldn’t be.
Here’s my final words of advice. Appraisers are to be completely independent and unbiased. The selection of appraisers should be as well. If you’re a Realtor and you truly think you have a case against an appraiser, then you need to discuss your valid concerns with the lender and they will take it from there. Otherwise, the appraiser chosen for the assignment should be allowed to complete the appraisal, without interference.