Patience Makes Perfect
By Stan Choate, Operations Manager
June 2023
This month’s blog post highlights a few scenarios in which appraisal customers should insist on a slower turnaround time, rather than the typical As-Soon-As-Possible delivery date. Anything worth doing takes time, and appraisals are no different. Here are three occasions when customer patience makes for a better appraisal.
(1) Wait for the survey to be completed.
Very often, our clients seek a land survey at the same time they seek an appraisal, and they see no problem commissioning them both at once. What our customers often don’t realize is that an appraiser can benefit greatly from having a completed survey. This is certainly true in cases when a property is being divided, or part of a property is being sold off from a larger property. In such cases, our two main questions are: (1) how many acres do we need to appraise? and (2) where are the boundaries of the property we need to appraise? Although we can answer those questions and complete our appraisal without a survey, having that survey would provide the best answers to both questions.
Therefore, we advise our clients to wait for the completion of the survey before ordering the appraisal. Alternatively, we advise them to order the appraisal but allow for time to complete the survey, even though it will delay delivery of the appraisal report. Admittedly, this coordination requires some planning on the part of all interested parties, especially in the case of purchases. Purchase agreements are usually set to close within thirty days of signature, but this often does not allow enough time for a survey and appraisal to be completed in succession. We would like our customers to be aware of this and set more realistic closing dates accordingly.
Of course, we can still appraisals for clients who do not follow this advice. We do try to accommodate all of our customers. But our fees are determined by how much work we must do, and working without a survey can certainly add to the workload. As it stands now, we typically expect to get calls from our customers asking us to revise recent reports based on newly completed surveys. While these revisions are sometimes not difficult, they also sometimes are more drastic, more time-consuming, and thus more costly for the customer—especially if the interested parties have greatly changed their minds on the number of acres and boundary lines. These problems and added fees could be avoided simply by waiting for the survey to be completed and approved by all interested parties.
(2) Wait for ongoing construction to be finished.
Nobody wants to pay more than they must for any product or service. But a sure way to raise an appraisal fee is to require the appraiser to visit a property multiple times. In most cases, this is not an issue: an appraiser only needs to visit a property once. For some projects, a second visit is necessary if the appraisal was done subject-to-completion. The second visit it meant to ensure that construction was completed according to plan.
But that second visit sometimes becomes a third visit. When our appraiser makes his second visit, he discovers that the construction is not actually complete. This requires him to return again at a later date to make sure—for real, this time—that construction was completed according to plan. And of course, we need to charge for all visits to the property.
Most often, the owners of a property will report to the lender that construction is complete, and the lender will ask the appraiser to make his second visit. Meanwhile, the owners only think they are finished with construction. The owners don’t see the significance of leaving certain projects undone: countertops, cabinets, garages, decks, porches, and walls and fixtures in upper floors and basements. To owners, these do not matter, and they tell the lender that the work is done—only to have the appraiser tell them it is not done, since these remaining projects do matter for an appraisal.
Again, the answer is to wait…at least wait long enough to confirm that all construction is truly complete. Lenders should always ask about the sort of finishes listed above, before asking the appraiser to return to the property.
(3) Wait for the written appraisal report.
Everyone wants to see a project—any project—done. Naturally, this translates into wanting an appraisal done “as soon as possible”—a very common request we receive. Sometimes this request goes further, and our customers ask for a “verbal” opinion of value if the written report will not be done soon enough. The assumption is that we can tell them the opinion of value without giving them a written report.
The first problem with this assumption is that we cannot give a verbal opinion of value without having a work file to support that opinion of value. Effectively, this means we could not give a verbal opinion of value until the actual report is finished and in our work file. But the second problem is more practical. The software we use to write our reports also helps us calculate our opinion of value. For that reason, we honestly do not know what our opinion of value will be until the report is finished.
Our customers seem to have the perception that the bulk of our time is spent writing the final report, hence their request for a verbal opinion of value. In reality, most of our time is spent researching sales. These sales are of incalculable importance for developing a reliable opinion of value, and so we need time to research and verify them. It is in our client’s best interest to allow time for this research to be finished to the best of our ability.
Therefore, when we ask our clients to wait for the written report, we are only telling them what is necessary. The good news is, waiting for the written report is a sure way to get a reliable, well-defended opinion of value. That is, ultimately, what we offer our customers, even if we ask them to wait for it. Contact us today for your appraisal needs.
