Thursday, February 4, 2010

Appraisers vs Realtors

Appraisers vs Realtors

I just completed a 2 day class from the Appraisal Institute. I was really
shocked to hear the Appraisal Institute Instructor, who lives on the East
Coast, slam NAR, the National Association of Realtors. And everyone in
class, except me, nods in agreement. While, as in every profession, there
are bad Realtors in the Twin Cities, both the Minnesota and Minneapolis
Realtors Associations are amazing organizations.

We were studying statistics in class. I asked the instructor about a
particular statistical report I typically put in my appraisals that is
published by the Minneapolis Realtors Association, who employs a full time
statistician. The teacher said "Realtors Associations just want to sell
houses and they skew the data to do that. I wouldn't use any report from the
Realtors Association." So NOT true-- at least in Minnesota. But this is what
this guy is teaching appraisers all over the county. Realtors are scum.

Do you think when an appraiser calls a Realtor with this attitude the
Realtor will be helpful and give the appraiser the info they need to
establish a realistic value?

Appraisers typically have superior training to Realtors on data collection
and analysis. But the Realtors understand the buyers and sellers, the people
side. My belief is that a critical job of appraisers is to document buyer
and seller behavior. But the classroom training is all about the Data, not
the People.

A reason for the Appraisers' animosity towards Realtors is Realtors are
perceived to be stealing business from Appraisers with the Broker Price
Opinion that some mortgage brokers and banks use instead of an appraisal.
Who is more qualified to say what a house is worth in a particular market?

The guy sitting behind me lives in Town X in Dakota County. I was excited to
talk to him because I'm doing a property tax appeal of townhome lots in his
community. I asked him if he thought these lots were worth $100,000 when
there are no lots sales to support this. "Oh yes", he said. "Because there
is no land in Town X". (not true).

"Well," I asked, "Have you appraised any townhomes in Town X?"

"Actually, no", he told me, "I do most of my work in Maple Grove."

Yet, he told me with certainty, with no facts to support it, that these lots
were worth $100,000. He calls himself an appraiser.

There are many wonderful appraisers that are passionate about their work and
do an excellent job. But an appraiser typically bases their opinion of value
on closed sales. A good realtor that really knows their market, especially
the agent sitting in a model every day, can tell me about the sales that
didn't occur. Understanding the sales that didn't happen is important when
establishing value when there are so few sales-which is true with land in
our recent market. But this is not taught in the appraisal classes I've

I believe the appraisal profession is much better served developing a
healthy respect and working relationship with Realtors than bashing them.

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