How bankers, brokers and appraisal companies can work together

Real Estate Weekly, May 21, 1997

Integrated Loan Services (ILS) offers some suggestions to those involved in the process to make it go as efficiently as possible.

How Brokers Can Help

In general, brokers can and should become active participants in the appraisal process. Among those things that they can contribute to the process are:

* Point out recent renovations that might have an impact on the appraisal. These might include: updated kitchens and bathrooms, improved landscaping and air or water filtration systems.

* Provide the listing sheet. "Brokers take a lot of time preparing information that encourages buyers to look at a property," says Dominick Pastorello, vice president of the A & D Appraisal Division of ILS. "Sharing that with an appraiser could impact the appraisal."

* Suggest that the homeowner be present at the appraisal. "Who knows the horne's unique features better than the person who lives in it?" points out Pastorello. "Having the homeowner present will help the appraiser understand the unique features and important amenities of the home." These could include: how well the house was maintained; how the neighborhood has improved over time; and what improvements were made to the house.

* Knowledge of the local area. Realtors may have market knowledge of recent sales that could impact the appraised value of the home. For example, they may know of private sales or recent transactions that have yet to show up in public records. They may also know about planned improvements in the town or neighborhood that could impact the property's value. These might be things like: new or upgraded schools, additional parks or the construction of new town facilities such as swimming pools or ice rinks.

What the Appraiser Can Do

"If the process is truly a partnership, brokers and bankers should also expect appraisers to do their part," says Pastorello. Here are his suggestions on what real estate professionals should anticipate from appraisal companies:

* An understanding of the sensitive nature of the home-buying process. Brokers have a right to expect to work with an appraisal company that is tuned into the emotional nature of the transaction. This is especially important with new homebuyers." An appraisal can have an enormous impact on the mortgage approval process and ultimately the purchase of the property," says Pastorello. "So, choose an appraisal company that contributes more to the process rather than simply earning a $250 fee."

* An interest in working in partnership with the broker or banker. Appraisers should welcome contact from those involved in the purchase of a property. They should also be proactive in initiating discussion with brokers and lenders on issues that they believe might impact the sale of a piece of property. These might include such things as permitting problems or deed restrictions.

* Backup support. Expect appraisers to provide information that supports their value conclusion. This is especially important if the appraisal is different from the sale price. Such documentation might include: data on comparables; rental information; specific plot plans that identify deed restrictions; and photographs of items that dramatically impact the market value of a home, either up or down. These could include such things as power lines, extraordinary landscaping or custom woodwork.

A willingness to reconsider. Occasionally, an appraisal will not agree with the negotiated price. "Bankers and brokers have a right to expect their appraisers to be willing to reconsider their initial analysis given additional information and field research." says Pastorello. Real estate professionals may be able to provide information on recent sales of comparables that an appraiser may have missed or closed transactions that have not yet been published. "There is no shame in changing the numbers if new information comes to light," Pastorello says. "We train our review appraisers to be responsive. In order to facilitate dispute resolutions, we even produce custom forms to get any additional facts as thoroughly and quickly as possible."

* Communication throughout the appraisal. Expect an appraiser to keep you informed throughout the appraisal process. Normally, appraisals should take five to seven business days. During that process, bankers should receive verification of orders, information on inspection dates and news of any delays. "You should be welcomed when calling to question the status at any time during the approval process," Pastorello says.

The bottom line is that the appraisal process provides the only non-biased estimate of value of a property. It is the "eyes and ears" of a bank that identifies the specifics about the property that drive value. To make it work as quickly end thoroughly as possible, appraisers, bankers and brokers must become partners in the process.

ILS is a 50-year old company that is one of the Northeast region's leading providers of residential and commercial loan support services. They provide appraisals, collateral assessments, credit reports, title searches, flood determinations, loan processing and property inspections. For more information about successful partnering in appraisals, contact ILS at (800) 826-1652.