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How do appraisers get selected by banks in NYC?

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  • How do appraisers get selected by banks in NYC?

    Banks apparently don't have a choice post the Great Financial Crisis of 2007 and 2008 in who the appraiser is. When they order an appraisal on behalf of a buyer who is financing a purchase, apparently the appraisal specialist is randomly selected by the government. We have seen this result in appraisers from out of the city coming in to appraise NYC coops and condos of which they are completely unfamiliar with. This can result in totally off or low appraised values which can really hurt a deal. Does anyone have more color on this and whether you can appeal an appraised value that comes in low because of this?

  • #2
    Last edited by mike; 03-23-2018, 03:22 PM.


    • #3
      Sorry, realized you also asked about the appeal process. Not sure if you're an agent, but word of advice. Definitely don't ask the appraiser first thing where he's from and where is company is headquartered.

      I work for a pretty large appraisal management company and they're based in Missouri. I live in Connecticut. The moment some real estate agents in NYC hear this they go nuts on me. It's super annoying. Obviously my company works all over the country and I'm highly specialized in Manhattan. Also, as I described in my post above, there's a major different between a member of the staff at an appraisal management company vs a contractor. A staff appraiser will always have specialized local knowledge for NYC.

      I would recommend not asking too many questions. Let the appraisal do their job and finish their appraisal report before trying to appeal. You never know whether they'll appraise high or low.

      But the short answer is yes you can appeal an appraised value that you find too low. Sometimes we appraisers may miss one or two comps, and if you can find it and the comps support a higher value, then we will fix it if it's obvious. However, I'm pretty thorough and I'd say that less than 1% of my appraised values are changed. So it's a pretty low hit rate to get an appeal and a different appraised price.

      Also, if you challenge an appraised value with your bank, they will follow up with us. If the dispute isn't resolved, banks sometimes will send a second appraiser to the property. This second appraiser may be their own in-house appraiser or from an appraisal management company. It won't be a contractor.

      So there you have it, everything you need to know about how appraisals work in New York City. Hope this helps!
      Last edited by mike; 03-23-2018, 03:22 PM.


      • #4
        It sounds like the only way you can dispute an appraisal is if there is a factual error in the report. A few good examples of factual errors include:

        1. Appraiser overstates the number of beds / baths in a comparable property
        2. Appraiser lists the wrong floor of the subject unit/property
        3. Appraiser appraises the wrong apartment (I've heard stories of this actually happening in the past. The appraiser simply collects the wrong apartment key from the doorman!)

        More subjective would be something like this: the comp you used, although just 2 blocks away from the subject property, is in a different and more valuable 'neighborhood' in NYC