Is it legal for an appraiser to contact the selling agent/seller before the buyer and their agent?

Asked by lmhudson63, Columbus, TX Wed Aug 28, 2013

My boyfriend and I are buying a house and we have been waiting weeks for this appraisal to come through, only to find out it had not even been done yet. When it was finally done last week we were told we would have the information in two (2) days. Four days later, at 8:30pm last night our agent called us to inform us that the appraisal (by word of mouth, as it is not on an official document yet) was released to the selling agent and the agent and seller had already worked out a plan to make the house worth more.

This CAN'T be legal, can it?!

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Barbara Coker, Mortgage Broker Or Lender, San Antonio, TX
Wed Aug 28, 2013
BEST ANSWER
An appraisal is an opinion of value based on a number of recent sales in the immediate market area, with adjustments for the variations between these "comps" and the subject property. So if an appraisal comes in low, the seller and their agent can appeal based on sales that the appraiser might have missed. The appraiser might have made errors, or not have been familiar with the area. With the Appraisal Management Company's not uncommon practice of hiring appraisers from more distant areas than we did in the past, there might have been better comps in more comparable neighborhoods.

After this appeal process, the final value is up to the underwriter. There is no guarantee that the value will be raised, just because the seller is appealing the original value. It's not a simple mathematical equation, such as 2+2=4.

Unfortunately, you'll need to wait for that procedure to work itself out.

Good luck!
Barbara Coker
NMLS#228545
Licensed Mortgage Loan Officer
100% Home Loans All Over Texas!
0 votes
I appreciate your help. My main concern is that the appraisal has not even been released as an official document (or by word of mouth to us) and the seller is already in the appealing process. I have absolutely no problem with the seller working to make the house appraise as we want it to do so as well. I just don't understand why this information was not relayed to us, who payed for the appraisal, first.
Flag Wed Aug 28, 2013
Tommy Burris, Mortgage Broker Or Lender, Baton Rouge, LA
Wed Aug 28, 2013
I give my appraisals to the buyer only.
They can share it if they wish.

Never heard of this. I would demand an explanation from the loan officer or the loan officer's boss
1 vote
Finally someone answers the actual question. I found out today that it was not initiated by the appraiser, it was the selling agent that called and asked for the appraisal. I understand that they have a right to the appraisal, but they have absolutely no right to receive, see, hear about, or be associated with it before my boyfriend who paid $500 dollars for it.
Flag Wed Aug 28, 2013
Bruce Lynn, Agent, Coppell, TX
Wed Aug 28, 2013
First of all relax and breathe......

Typically once your lender orders the appraisal, it should be back in a week or two at most. Typically you would not have control over when it was ordered or when it is returned. So waiting weeks....not sure where that comes into play. I don't think that is a reflection on the appraiser. Could be, but that would be somewhat unusual. If there is a concern, ask your lender when it was ordered.

How long did you have between contract and closing? Typical is about 30-60 days. Most lenders seem to want to jump right on the appraisal, but not all do nor is it needed. They know their processing times.

The appraisal is more than just visiting the house....sometimes the appraiser does most of the work before visiting, sometimes after, so turn around times after the visit can vary. Could be a couple of days...could be a week. So nothing unusual there to me.

It is not unusual for the seller's agent and even the buyer's agent to never see or talk to the appraiser or see the appraisal or know the number. Possible....nothing wrong with it, but many appraisers don't have time to be out calling and negotiating with people. If they needed questions clarified they might call. There are reasons they could call or could need clarification.

In the end I am not sure of what your concern is unless you have contracted on a house based on the appraised value. That is unusual.

Let's say your contract is for $200,000.....you agreed on this, your agent discussed the CMA with you, other properties you saw were in this price range.....and the sellers and the appraiser somehow conspire to get the appraisal to $250,000. Your contract would still be at $200,000, so why would you care? How are you damaged?

The only time I can think this would really be an issue is if you thought the property was worth X and the seller thought it was worth Y and you came up with some kind of agreement to let an appraiser decide the value and you would purchase at whatever the price the appraiser came up with. That would be unusual.

I would suggest you discuss your concerns with your realtor in a calm fashion.

The appraiser is not prohibited from speaking with the seller, or the seller's agent. Think about it, they have to call someone to get inside the house.

In the end I'm thinking if you contracted on a house for $200K and the appraisal comes back at $250K, you would be happy and think you got a great deal.
0 votes
Tim Moore, Agent, Kitty Hawk, NC
Wed Aug 28, 2013
Who cares what the seller and their agent does at this point. You have a contract and an agreed price - RIGHT? The appraisal won't change that unless the appraisal comes in lower than the agreed price. Are you saying they are trying to increase the appraisal because it came in low? If so then yes, it is legal for the seller to show an appraiser where they think the appraiser is wrong. That is quite common. You agreed on a price, now the appraiser has to justify the price to the lender, that is all the appraisal does. If the appraiser can show justification then they will if they have to take a re-look at comps. Very common.
0 votes
I am not concerned about whether it appraised for less and they are making it worth more. My concern is that we payed almost $500 for an appraisal that we were lied about for a month only to find out that they are contacting the seller about it instead of us, when we paid for it.
Flag Wed Aug 28, 2013
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