Everyone has horror stories about appraisers missing or ignoring obvious comparable sales, correlating to the absolutely lowest end of the market, or calling out ridiculously insignificant condition issues. We have had hundreds of transactions blown up by incompetent appraisers.
With that said, we are going to defend the many excellent appraisers still working in the industry. We are friends with many of them, and we hear their “horror stories” as well.
Appraisers cannot turn a blind eye to visible damage or structural issues (leaky roof, water damage, sloping foundation, etc.). Appraisers also legitimately need to make sure appliances are working when they do FHA appraisals.
In addition, appraisers have strict appraisal-guidelines which they have to adhere. They cannot simply ignore low comparable sales if they are recent and close to the subject property; they can “explain them,” but they cannot ignore them. Comparable sales also must generally be closed within 90 days, within a mile of the subject property, not over a major barrier (freeway, railroad tracks, etc.), and within 20% of the size of the subject property (among other things).
If a buyer moves into a property and becomes disgruntled and litigious, the appraiser could very likely get named in a lawsuit for not disclosing everything.
Likewise, disgruntled Realtors and Lenders can also hold appraisers accountable. Our point is that it is never worth it for appraisers to ignore obvious defects and nearby comparable sales and risk litigation and/or losing their licenses. This is especially the case when you consider how small their fees are compared to loan officer and Realtor commissions.
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646