Lenders used to be allowed to select an appraiser. While that was just a couple of years ago, you can consider them the olden days.

The general consensus was that lenders had relationships with the appraisers and the appraisers were valuing homes based on their relationships with their lender friends – not the actual value of the home.

Today, lenders are under strict guidelines not to select or even speak with the appraiser. While that makes a lot of sense, the random appraisal selection is causing headaches for lenders, buyers, homeowners and even Realtors because, the majority of the time, the appraiser selected does not work or live in the neighborhood or city where they are hired.

I have experienced working with appraisers who live and work outside the Bay Area, but appraise properties in San Francisco. This does not make sense. I am on the ground experiencing daily market trends in my San Francisco neighborhood – I wouldn’t consider myself expert in markets outside the city, so why should it work vice versa?

Normally, appraisers look at sales comparables based on a mile radius. This is too far for San Francisco. San Francisco’s real estate market is unique because home values vary wildly from one street to the next. For example, if your home is in Noe Valley and the appraiser looks at sales comparables a mile away, this could be in the Castro, Eureka Valley or Bernal Heights neighborhoods. They are far different from one another.

Refinancing appraisals appear to be much more challenging than the sale process. I had a client going through a refinance where the appraisal team was partially from San Mateo and partially from Jacksonville, Florida. One comment from the appraisal team determined that parking in San Francisco was of very little value. Does the appraiser experience parking in a neighborhood after 6pm, when everyone is coming home from work? I was just as puzzled as my client.

Although, lenders can’t speak to appraisers, your Realtor can be there when the appraiser arrives. Realtors can help support the value of your home with appropriate sales comparables. It is best to be prepared and educated on the current value of your home before the appraiser is scheduled. I would love to help you walk you through an analysis.