Why are homeowners and Realtors having trouble with appraisals? For the disturbing answer, follow me through the current system. You want to purchase a home or refinance your existing home. You apply for a mortgage and give the lender pounds of documentation needed to qualify. You become approved for the mortgage. Congrats! Then an appraisal is ordered.

From this point, all lenders must follow the same procedure, which involves emailing an appraisal management company (AMC). That company has the responsibility of finding an appraiser and placing the order. When this primary step has been completed, your credit card will be charged. That’s right: before the work is done. Neither your mortgage lender, nor your Realtor is permitted to order the appraisal, by law, or even speak with the appraiser as to the value of your property.

When the appraisal is completed, it is sent to the underwriter. If the value, determined by the appraiser, is too low to qualify for the mortgage requested, the tedious task you just endured is for naught. What do you do? You head back to your lender to explore any and all possible remedies.

Recently an appraisal was ordered for a purchase on a single-family home. This was a patio home, meaning it was about six inches between this house and the one next door. The appraiser reported the home as a condo and asked for a master condo policy, etc. What a mess. After much delay, a second appraisal was conducted and the purchase was finally closed. This error, fortunately, could be corrected, but not all are as doable or involve a lender willing to stay the course.

Basically, appraisers are not accountable to the homeowner, the mortgage company, or the Realtor. They are entities unto themselves who often come to the game with ideas of speed rather then accuracy. What a system! I have heard stories that appraisers are hired from other cities outside Santa Fe. They show up, charge an excessive amount, wrongly depict the property, and leave.

Everyone in every business falls under some measure of accountability. Certainly appraisers must also be accountable to their customer. The customer is the homeowner, not the AMC.

Experience in the mortgage business is very important in ordering the appraisal. We press with all AMC orders to secure a Santa Fe appraiser with experience to accurately complete the job. Be cautious and ask questions.

Jim Gay was a real-estate broker for 20 years and has been a financial consultant to Fortune 500 companies. He is currently a broker/owner of The Mortgage Place, Inc. (986-9080) and can be reached at jim@jimgayhomemortgage.com.



(1) comment

Joseph Mier


What you state in this article is not correct. You may have had a bad experience with a single appraiser but what you state here is just plain wrong.

Appraisers are accountable to the client which in the case you mention would be the lender. The homebuyer is not the client as they are not lending the money to purchase the home. Until that home is paid off the property belongs to the bank and the purpose of the appraisal is to value the collateral in case the bank as to foreclose on the property.

You are correct when you say "ask for a local appraiser that is geographically competent to appraise homes in the area."

Did you as the broker/agent supply your client with the correct legal description of the property so that the appraiser could identify the property was not a condo?

Agents and brokers must also take some responsibility to supply the correct information to the buyer so that they can supply that information to the lender and appraiser.

Please do not confuse the consumers as to who the appraiser is accountable to as it is VERY clear the appraiser is accountable to the lender that is taking the risk of loaning the money.

One of the main reasons all of the safeguards are in place now is because of some of the real estate agents that were putting pressure on appraisers to value properties at a certain number or get blacklisted.

Welcome to the discussion.

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