Appraisers over-stepping their license? Stepping on ours?

This may apply to more states than Texas, but I am mainly concerned with our state.

Lately I have had an influx of inquiries for “certified” specialty inspections - roofs or foundations mainly. The caller’s story is always the same. They are refinancing and had an appraisal. The Appraiser noted a concern (I’ll give three examples), did not expand or fully inspect. But his “concern” is now holding up the refi and causing the homeowner to have to search out additional professionals with little or no specifics on what they really need done.

  1. Foundation - 30 yo home, large tree in front yard. Appraiser commented that the tree may be too large/too close to house and “COULD” be detrimental to the foundation health. Did not comment on any observable problems - just the presence of the tree. Underwriter proceeds to tell homeowner - you have to get a certified inspection to verify that the foundation is good and not being harmed by the tree. Homeowner has lived in home for 10 years and has noticed no problems. Notices no problems after looking closely after Appraiser comment. But is being forced to pay to have this looked at. I recommended going ahead and skipping right to a licensed PE.

  2. Foundation - unknown age. Home had foundation problems that were noted at inspection several years ago and fixed. Homeowner has documentation. Appraiser noted possible foundation concerns with no details (I would assume he saw cracks that could have been the result of the previous repair.) Underwriter wants homeowner to have “certified” inspection of foundation. Homeowner has provided documentation from foundation repair company and that was not acceptable. Again, I recommended a licensed PE. Unsure of exactly what or who is “certifying” these mystery certified foundation inspections.

  3. Roof (sort of) - Appraiser notes a stain at interior ceiling. Does not investigate further. Calls it a roof leak. Homeowner states that roof is 3 years old and that the stain was noted on their original inspection. Was the result of a leaking AC condensate pan. Has been repaired. Underwriter is calling for a “certified” roof inspection. He never visited the attic.

So my questions and concerns.

  1. What are these mystery certifications. On the foundations, I do not feel that I can in good faith go out and charge these people to look at the foundation in a situation where the underwriter did not accept a licensed foundation company paperwork. I am afraid they would not like a general professional inspector’s report and force the client to pay further for a licensed PE. So I pass it off, though I think I am qualified.

  2. Are these appraiser not overstepping their license and transgressing onto licensed professional inspector territory? They are commenting on visual clues with no investigation and without the proper license/training. Obviously they see a lot of homes and can claim general experience and knowledge. I doubt they would consider it cool or legal for me to start offering opinions on the values of the homes I inspect “because I see a lot of houses and have a good feel for that neighborhood.” If the underwriters / appraisers want these homes inspected should they not be hiring and or ordering the clients to hire LICENSED Professional Inspectors? Is this not a conflict of the licensing that is overseen by the state by the TREC?

3)Have others noticed this trend? Should we as a group perhaps inquire with the TREC? Personally, I see this as a pretty clear transgression of an unlicensed person performing and being paid for inspecting. But they are not licensed inspectors. They are not following the SoP. Etc.

What say you?

I have received several calls for this as well. I have referred them b/c I am not comfortable (though qualified) coming in behind an appraiser for vague comments. An appraiser friend of mine has expressed concern as well b/c he is now being required to do “inspector”-type work.

I have gone out on FHA finals where the appraiser commented on something, but in those instances, I merely checked to see if the repairs were made.

I do see it as a trend and I don’t have a good answer.

I always thought Appraisal and Inspection should be combined.
Any thoughts?

I have had one similar situation in the past with an appraiser (in Virginia). This appraiser stated or noted a problem with the floor framing/joists. I was called back to re-examine the floor joists, etc; along with a general contractor. No problems were observed by me or the GC. I ended up sending a bill to the appraiser (of course he didn’y pay), but I also called and spoke with him. I asked him where he got his education, training and experience in evaluating structural members of a home; no surprise, no training, etc. I also asked him, when he went into the crawlspace to examine the problem; I didn’t have to finish the question he stated he does not examine or enter crawl spaces. I advised him to stop over stepping his function or job description. Appraisers are licensed in Virginia and he was [FONT=Times New Roman]seriously exceeding the state guide lines (SOP’s) for an appraisal.

I haven’t experienced this with appraisers, but It’s a concern just hearing about it.

Most of the requests I get for specific system inspections are to come behind the buyer’s original inspector: “I had my house inspected, but my inspector does’t do septic systems” or “my inspector recommended a certified roof inspection but he doesn’t walk on roofs” or “my inspector doesn’t do infrared”… Sometimes it’s the buyer calling and sometimes it’s the selling agent.

Most of these callers don’t like the price I quote to come do cleanup after the cheap guy they hired originally.

This is being driven by the FHA requirements.

For years the VC sheet had been included with appraisals and any licensed inspector in the state of Texas is qualified to provide a roof, structural, plumbing or electrical certification as required by the FHA lender regarding noted VC’s on appraisals. This is nothing new and I do believe that the VC sheets are no longer required to be submitted with appraisals. Don’t know why they are still asking for them unless some appraisers are still including VC sheets.

Rural Development for the last couple of years are letting appraisers state the septic systems are in proper working order and there are no visible sign of termites. The Federal guys are claiming that NAR is pushing on them to allow appraisers to do these, even though it is against state law. My State tried to stop R.D. but claims to be powerless

Same thing here in Washington, i here about it all the time. It seems to basically boil down to appraisers are having to now do there jobs. Lender would not lend a client the loan until everything on my pest report was cleared. Started with appraiser stating there is firewood stacked against the house on a 12ft high deck. They then had to have a pest report done on the house.
Bank owned house.
Bank would not fix anything.
So potential buyer went out himself and cleaned the gutters out so he could get the loan.
It does seem like appraisers are overstepping there job. But there actually just making more work for me.
They refer to a qualified inspector.

If you all are just running into this … Your 20 Yrs behind times.

For years this has been a common occurrance in the Kansas City Area.

The Appraiser thought the roof looked wavy; the appraiser thought the grade was bad; the appraiser saw older epoxied cracks in a foundation that has been piered and restrained with steel I-beams, etc, etc.

In each case the Appraiser called recommended FURTHER evaluation by a LICENSED … (usually a PE) and wham the deal is stopped by someone with MOSTLY no training or expertise in what they’re talking about.


You are correct. The appraiser will often make a determination that a roof has five years left, that a foundation is a potential problem, etc.

However, it may be permitted by law, or even required by the law regulating that particular profession.

For instance, here in NY the only professions that can LEGALLY offer an opinion as to the structural integrety of a building is a 1) licensed Professional Engineer and 2) a licensed Appraiser.

As it should be Joe / Who better to do structural diagnosis than a highly trained and licensed appraiser

The appraisal business is much different than 4-10 yrs ago. It seemed the general practice was that most of the time the appraiser just did a drive by. I remember than I was criticizing the appraiser because he made $400 on a drive by. Happened all the time. I haven’t seena drive by appraiser in a few years now. Now I wanna critic that he does too much.
Go figure

Under the Code of Federal Regulations real estate appraisers are held out to be on a equal status as financial institutions. A real estate appraiser is also held responsible (federally) for property condition. In short, they have to cover themselves (on property condition) as the feds are cracking down on them.

I learned of this from a national real estate appraiser convention a few years back that I spoke at on property condition. I sat through one of their legal seminars when this was discussed.

However, under the original post on this topic there are appraisers that ask for
some ridiculous B.S. just as much as some real estate inspectors do. In the end, there are no “certifications”. It’s just a piece of paper that the underwriter can come back on in 2 or 5 years if they are looking for someone to blame if the lender has to take back the property and is faced with repairs. Yea, it’s a long shot but welcome to the real world of CYA.

I thought that the life of our industry was limited. In Kansas, appraisers are exempt from home inspection laws; and now they are doing home inspections. Lamakers in Kansas have created this senerio. What a shame for the home buyers. They do not know who to believe when it comes to home defects in the home that they are considering for purchase.

Do the lenders believe the appraisers, who are not licensed, or experienced for home inspections? Lenders need to re-think what they are doing.



I think you need to check your facts about KS appraisers!

So Buck, What does that mean?

Found the CFR on real estate appraisers I’ve had during a rare event of desk cleaning. (I thought it was a cherry colored desk the last time I saw it.)

Federal Register Vol.65 No.101; May 24, 2000, Rules and regulations
page 33679

(k)(1) Financial Institution (definition paragraph)
(2) examples of financial institution

(ii) a personal property or real estate appraiser is a financial institution because real and personal property appraisal is a financial activity listed in 12CFR 225.28(b)(2)(i) and referenced in section 4(k)(4)(F) of the Bank Holding Company Act (of 1956).

As we know it the typical appraiser is paid by the lender and works for the lender (not the buyer). If the appraiser sees something that might cost the lender money then he/she has a right to ask for more information or whatever else they suggest in order to cover themselves as they are held liable for the valuation and condition of property. The actual lender wants to know if a property is a pig with lipstick and will deduct from valuation (old roofs, cracked slabs, lots of wood rot, etc.) So, when a real estate appraiser is asking for something it is the same as the lender asking for the information.

Tip: If you ever buy a home make sure you get a good inspection and provide a copy of the inspection to the real estate appraiser.
They will deduct from value what they consider cost of repair as condition has an affect on market value. In a lot of areas a good inspection (for defects) is a great way to reduce your yearly property tax valuation. If you have contractor repair quotes and pictures the tax man will deduct that from the tax value. They do expect you to have repairs made by the next year but if you don’t - go back and protest.

Giving a Lender/Appraiser the inspection report may cause more trouble than it solves.

Be careful what you wish for.