How do you hire an appraiser for your rental property? I’m going to tell you how to hire an appraiser. No doubt you’ve probably had an appraisal come in that seemed way off or just had you scratching your head about it. I know I have. I recently went through this with an appraiser that I never should have hired so I’m going to give you the exact questions to ask them so you avoid my pitfall.
Appraiser License Number
Ask them what their license number is. That person will know that you’re serious. They obviously have to be licensed as an appraiser and if they don’t know that number off the top of their head or if they don’t have ready access to it you may find that they’re actually not licensed to be an appraiser in the first place. That should be a big whistle, bells going off, that you shouldn’t hire this person. You’re not license as an appraiser? Where did you get yours out of a cereal box? So ask them what their appraiser license number is and they should have that ready to send right over to you.
Are they Locally Based?
This next one is huge and this was actually the problem with the appraiser that I hired recently. Ask that appraiser where their office is located. What does that tell you? That tells you their geographic consistency; that tells you whether they come to this area often. We were having an appraisal done on a property in Indiana and we found out that the appraiser lived in Ohio. What? You don’t even know the area that you’re appraising? You have no sense of this area? It’s very important to have somebody who is from the area who knows what they are appraising. This person had to drive four hours to come there and he did a bunch of appraisals for this bank in one particular day. Not going to fly. You don’t know the area, get out.
Do They Work Alone or For a Reputable Company?
Ask that appraiser if they are a one man band or if they work for a company, a reputable company. Very often if you have an appraiser that’s a one man show than they aren’t talking to many people. They are kind of a loner. Now that’s not to disparage any appraisers out there who don’t work in an office with other appraisers but they don’t tend to then commiserate and talk about the things that they find during an appraisal. There are shared experiences that they’re able to work with and talk with other appraisers and they’re able to see sort of consistencies or inconsistencies in the marketplace. If you’re a one man band if that person is working out of their home and they don’t have an office experience then chances are they are solo and they may not give you the best reflection of that area, especially if they don’t know what’s going on in that market that you’re living in.
Licensed, Certified, or Both?
Ask the appraiser if they are licensed, certified or a both. This question is interesting because if they are licensed that’s the lowest level of certification. Basically they’re able to fill out forms as a licensed appraiser. As a certified appraiser that’s the highest classification for an appraiser with the state and therefore if that person is certified they have the ability and the right to basically examine any residential property and give you an accurate reflection of its value. My personal preference is to go with a certified appraiser.
A Member of the Local MLS
Another really important question to ask that appraiser is if they are a member of the local MLS. The MLS is the multiple listing service and that is where realtors list their properties, but each is regionally based. So if you’re a realtor in Philadelphia you’re not going to have access to the realtors MLS database in another state or another region. You basically get access to the counties in which you work and so this is crucial because when they are going to pull up comparable properties to analyze the value of your home they’re going to be using the multiple listing service to pull these properties. If they’re from Ohio and they’re coming in from out of state they’re not going to have access to the multiple listing service to see comparable properties.
Let me give you a perfect example, this happened to me. We had an appraiser who came in from out of state and appraised one of our properties. That individual pulled old comparable properties before they were rehabbed. Our home that we were getting appraised had been totally gutted and rehabbed and we knew that the value was around $60,000 to $65,000 based on the other sales in the neighborhood. This individual appraiser pulled the comps of pre-rehab homes, ones that were falling apart and gave us a value on our property about $30,000 to $35,000 based on old out of date comparable properties. This individual did not have access to the MLS and therefore didn’t have up to date comparable properties. This is key. You have to have these in order to do a proper evaluation and an appraisal on a property.
Those are some key takeaways on how to hire an appraiser properly. I would ask them those specific questions and you’ll be better off for it.