The Appraiser Isn't Your Enemy — The Enemy Might Be You

 

I spent seven hours with the Northstar Appraisal Institute last month in continuing education. It changed how I talk to every seller I work with.

Appraisers don't wave a pricing wand. They follow a strict, evidence-based process governed by data, market reaction, and condition. They are not guessing — and they are not mind readers.

Here's the problem: Agents often think that they have a better read on the market than the appraiser, and write cute descriptions hoping to engage buyers.

Chef’s kitchen, adjacent pantry, or luxury finishes don’t automatically equate higher value. They don’t need adjectives, they need evidence.

Fannie Mae and Freddie Mac require measurement areas below grade are treated separately from above-grade living area, even when beautifully finished. Ceiling height and access also matter.

That means an MLS listing may say “3,200 finished square feet,” while the appraisal reports:

• 2,200 square feet above grade
• 1,000 square feet of finished basement

The basement isn't worthless. It simply is not combined with above-grade living area in the same category.

If your seller replaced the HVAC, upgraded to triple-pane windows, added a geothermal system, or achieved a HERS score of 40 — and you didn't document it — the appraiser can’t give it value. It doesn’t exist. The appraiser doesn’t need a sales pitch, he needs receipts.

What documentation does help:

• Dates and costs for every major upgrade (roof, HVAC, windows, insulation)
• Manufacturer specs and efficiency ratings — not just "new windows"
• HERS scores, Energy Star certifications, Green Path designations
• Receipts, utility bills, contractor invoices, and permits
• Descriptions: if the water heater is electric on demand, say so, give details.Solar: Detail if the seller paid for it, if he/she still owes on it.

Concessions must be explained

A sale at $600,000 with a rate buydown, closing-cost credit or other incentive may not reflect the same market position as a clean $600,000 sale.

Agents should identify:

• Seller-paid closing costs
• Interest-rate buydowns
• Repair allowances
• Builder incentives
• Personal property included
• Non-arm’s-length circumstances
• Multiple-offer or distressed-sale conditions

The contract price alone does not tell the full story.

Our market has specialized appraisers who understand green builds and unique construction. They want us to tell them exactly what is in the home that gives it value. If the home has radiant heat, explain. They're on our side — if we give them something to work with.

I’ve made it a practice since the Recession to prepare a packet of information on the house, and neighborhood for the appraiser before hand. Often, I’ve seen other homes in the neighborhood that the appraiser hasn’t. One time I listed a 1940s home in SW Minneapolis and there were three others on the market just like it, all at different price points. The seller wanted to see comps so we walked each property. When the buyer’s appraiser made the appointment I sent him those comps, detailed description of condition, and why prices differed. Every agent can prepare comps and a detailed report in advance of the appraisal. Most of the time they appreciate the input….if we didn’t make it up.

The next time an appraisal comes in low, before you fire off that email, ask yourself: Did I give them the data they needed?

Accurate value starts with accurate information. That's not the appraiser's job — it's ours. Appraisers have a college education, some are engineers. Give them smart info.