Lenders are not ever allowed to communicate directly with appraisers. We are only allowed to order appraisals through our Appraisal Management Company, which in turn contacts the appraiser.
Realtors, however, can communicate directly with appraisers and we highly recommend it. Realtors often ask us what they are “allowed to say.” Our answer is: “anything, as long as you are nice, and you do not step on the appraiser’s ego by telling him ‘how’ to do his job.”
Because we often ask Realtors to meet appraisers and provide comparable sales data, below again are the Comparable Sales Data guidelines. This is very important information because we so often have people providing invalid comparable sales.
1. Size: Comps need to be within 20% of the size of the subject property. For example, we usually cannot use a 1,300 sf comp for a 1,000 sf subject property. Likewise, we cannot use a 700 sf comp for a 1,000 sf property.
2. Distance: Comps need to be within one mile of the subject property, and not over any major barriers like a freeway or a river.
3. Same Town/City: Comps need to be in the same city as the subject property in most cases, even if the comp is less than a block from the subject property.
4. Closed: Comps need to have closed in the last 90 days. Pending sales and listings are not acceptable.
5. Lot Size: Lot sizes must be accounted for too. If the subject property is on a small lot of 6,000 sf for example, a comp and a 12,000 sf lot will have to be downwardly adjusted significantly in most cases.
6. Adverse Influences: If the subject is on a busy street or abuts a school, a freeway or an industrial area, valid comps will need to have similar adverse influences.
7. Bracketing Comps. Valid comps need to “bracket” the appraised value. Hence, at least one comp needs to be priced higher than the appraised value, and one should be priced lower.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167