Critical Considerations When Choosing an Appraiser
I’ve been involved with numerous divorce related assignments and frankly I’m appalled with the lack of competency exhibited by some opposing valuation experts. Appraisers are supposed to promote and maintain the public’s trust with clear communication of objective, fair and defensible appraisals in a manner that is not misleading. However some of my competition does not adhere to the same professional standards.
I have observed appraisers working in unfamiliar areas; ocean views overlooked to enhance the client’s value position; only inferior properties used in the analysis again to seemingly help their client with the settlement. In one case a Realtor represented herself and the case went to trial; the judge ruled in my favor because she was viewed as an advocate rather than an objective third-party. These types of errors are easily recognizable and damaging to the credibility of both the valuation expert and/or the hiring party.
Real property settlement issues are critical due to the enormity of the asset; for many of us our home or homes are the largest and most emotional things we own. Whoever you choose to perform the appraisal, please interview the expert and consider:
- The appraiser should have professional credentials (Appraisal Institute – SRA designation and a state certification are preferred, state license at a minimum). When it was created, the SRA designation stood for: Senior Residential Appraiser.
- The appraiser should be knowledgeable of your neighborhood; the more familiar, the better. Each neighborhood has its own nuances and preferences that affect market value; the evaluator should recognize and understand those issues.
- Comparable sales are the most reliable indicators of market value however pending sales and competitive active listings should also be included in the analysis because sales are typically 30 days old and may not reflect current market trends. How would you like to buy a property in a market with declining values and not have that decline accounted for in the purchase price?
- The appraiser should interview the agents of each comparable sale used in the analysis. They can provide transaction and market insights that many appraisers don’t take the time to find out.
- Is the appraiser willing to provide expert witness testimony in a deposition or court room and have they been qualified as an expert witness in the local courts?
And finally, is the assignment fee commensurate with a quality appraisal? Probably not by coincidence, all of the opposing appraisal experts I mentioned above had fees in the lower range of the fee spectrum. You will get what you pay for, and sometimes fees aren't enough for a credible appraisal. I recommend that you not be penny wise and dollar foolish.