Tuesday, February 22, 2011

If You're Refinancing---

Had a chat with "our Schwab guy" last week, who mentioned infrequent appraisal issues for their bank's refi operation.

I've mentioned before that appraisals have been relatively straightforward these last few months, after a difficult period (difficult because there were too few sales in some cases to provide a basis for cautious appraisers to assess value, and difficult because the appraisal community went through a regulatory overhaul, which led to a variety of transition problems).

One continuing issue is that in trying to avoid inappropriate communication between lender and appraiser ('hey; can we get this value up to $1.5 million? My owner would really like to refi and take out $100,000....'), regulators created intermediaries. Lenders call the intermediary, who in turn assigns an appraiser to the property. Too frequently, the appraisers on the list bid low (with only some of those savings passed on to you), but they haven't been west of Manteca in a year.

We agents or brokers have the right to essentially take a pass on an out of area appraiser assigned to appraise your home. Your refi lender (like our Schwab guy) can't do the same, but you can.

When your appraiser calls to set the appointment, you can probe his/her experience in the area and price range. If you don't hear a good story, you can say "let me call you back." Call your lender and ask for a new appraiser. (They'll in turn call the appraisal management company, and you'll be assigned the next appraiser on the list.)

And don't forget to ask me for comparables, in case your appraiser doesn't realize that Piedmont Avenue is not the same as Piedmont, CA.

Not long ago, my sellers were assigned an appraiser from Sacramento. With trepidation, I called the appraiser expecting to have to take a pass. Instead, it turned out that she had only recently moved to Sacramento, had previously practiced in Oakland, and had lived off Park Boulevard. She did a beautiful job on the appraisal (and by that I don't just mean that she hit the purchase price).

Questions you might ask include: Where are you based? How many appraisals have you completed in the East Bay on this side of the Tunnel in the past year? When did you last do an appraisal in Piedmont? If the answers hang together, you should get a solid appraisal, even if the number isn't as high as you might prefer.

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