Imagine you’re at an inspection. During your standard walk-through, you look out the window and see a car pull up into the driveway. Your mind starts racing when you see the magnetic banners on the side, advertising so-and-so agent with such-and-such real estate company. They walk in the door with a stack of papers and say, “Oh, I’m so glad you’re still here! I was hoping I could find you here and bend your ear for few minutes.” From there, they jump into their questions. This has happened a lot to me. Here are some of the most common questions I get asked, and my responses:
- “Do you think we’re going to have a problem?” We all know that this generally means, “Is this going to come out low?” Depending on how the question is asked, I might say with a slight grin and a wink, “I don’t see any problems,” followed by, “Do you mean, ‘is it going to come out lower than the purchase price?’ I don’t actually know yet.” This can be followed by a brief explanation of the work still left to do, and even maybe some statistics about how often this actually happens.
- “Here are some comps for this property, and the price per square foot are higher than the subject.” The comparison I make is this: selling a house with price per square foot is akin to selling a car by the pound. Here, just help them understand why we don’t use price per square foot. Remember, the purpose here is to educate, not prove to them why you’re right and they’re wrong.
- “What is the market currently like?” This is kind of a vague question, and I may say that when I answer their question. Really, what they’re saying is, “Is this appraisal going to be okay?” Take this as an opportunity to teach them about how the market is working in your area – maybe the market is up in the area, but declining or stable in the neighborhood you’re inspecting in for them. Know your stuff, and don’t forget to answer the question that they didn’t ask but probably want answered.
- “Can you call me if you’re running into problems?” The answer here is simple – yes! Even if I don’t feel like something is a problem, if it’s going to seem problematic to them, I try to give them a call as a common courtesy.
- “Can you give me a copy when you’re done with the appraisal?” For a borrower, I usually say no, but he good news is, they get a copy once everything has gone through and been finalized, and I’ll tell them as much. For the agent, I tell them that I will give a copy to the lender, and the lender will do with it what they need to from that point.
Remember, the purpose here is to educate! Don’t get defensive. Just explain the process to them, and be respectful.
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7 thoughts on “Responding To the 5 Most Popular Questions From Agents”
Dustin, you tell them, Yes, I will call if there’s a problem? Like, value lower than purchase price? Like, highly confidential information to which they are not a party? This goes against what I’ve been told in about 8 USPAP classes. Can you elaborate on why you think that’s OK?
No! You stop at “I don’t know yet”.
It is always good idea to communicate with your client your intention to deliver confidential information with anyone other than the client (borrower, agent, homeowner). Most experienced appraisers have long time clients and know what is acceptable to them and what is not and in that case you do not have to call them everytime. For all my mortgage clients it is acceptable to let the agents know when the value is coming in low and try to obtain additional information about the subject property or maybe off market properties that more comparable that you were not aware of and it is always best practice for me and firm to get all the information available and give everyone a chance to have imput especially when the value is coming in low because the overwhelming majority of state board complaints are intiated because of appraised value lower than the contract price or borrowers expectation.
I always ask an agent for their CMA if I am coming below the sales price. Sometimes my search may miss a sale, or I need to go back 4 months instead of 3 for a great comp. It’s way better to ask on the front end than to get a reconsideration of value request when they provide a comp 2 streets over that is recent and similar. That makes you look careless. And often they will say “I don’t have any sales that support that price and told my client it was too high, but they insisted”. It is always good practice to call.
I use a dollar per square foot analysis to adjust for differences is living area size. The comps I use are the most similar and competing. Is that wrong?
Darrin Rodgers, I also give the agent a call. There I nothing wrong with inquiring as to how they got their list price and what they used to support that. Just because I review their analysis, doesn’t mean that I’m being influenced in any way. That way when you do come in low, at least they know that you did your due diligence.
With what seems to be a business model of profits before principles, of course Dustin wants to answer questions that he shouldn’t.
When agents, brokers, loan officers, processors, borrowers, owners, AMC’s, etc. say, the last appraiser did, “fill in the blank”, they are talking about the Dustin’s of the world.
Seek the truth.