My New Outside Blog: Keeping It Within the Box

Keeping It Within the Box

  The Box

Thanks to HVCC requirements we now have this box that the appraisal report must neatly fit.  No out of the box thinking allowed, it MUST conform all into a tidy package, no rough edges sticking out, no room for a little fluff on top.  Just a plain vanilla box sealed to perfection.

Enter Real World properties.  Homes are unique and not all are clones of each other, many points of difference and heaven forbid if they are located in an area where a move is rare .. no recent sales activity. 

As REALTORS, we need to be able to quickly ascertain if a listing opportunity conforms to "the box" or if out of the box challenge will arise.  As a professional you need to be able to relay to your clients the hurdles of the future if there are some that will need to be jumped. 

A few in the box rules to be familiar are:

  • Recent sales within the last six months.
  • Location of sales - are they nearby or is a great distance required?
  • Size of the home - are sales relatively similar in size or would large square footage variances be present for comparable properties?
  • Line item adjustment - does your home have an improvement that other sales do not have that would make an across the board adjustment necessary for the amenity - i.e. pool?  Underwriters hate this type of adjustment across the board!
  • Bracketing - are there sales that are larger in size, smaller in size, sale above and below the sales price?

If you have a challenged property be sure that you try to make up for this obstacle with a strong buyer candidate.  One that has a good down payment, great credit. 

You may be able to do some great out of the box marketing and even nail the right value potential for the home but the package will close if a buyer's appraisal does not meet the rigid rules. 

We would like to blame the appraiser (and there are some that do deserve the blame) but the reality is that limited data will procure a challenged report.  A challenged report, even when the value appraises, most likely will face an underwriter rejecting it, calling for a review, etc. 

Be prepared on the front end.  Keep current with all market activity and when that offer comes in be realistic with your clients.  This is called representation.



Comment balloon 9 commentsConnie Goodrich • August 03 2011 06:17PM


Hi Connie, you always have great insight and give great points to the issue.  Your lat Bolded paragraph is the best.  Representation is a true responsibility.  Have a great evening.

Posted by Judith Parker, CRS, GRI, CMRS, Charlotte, NC (ProStead Realty) over 8 years ago

Good evening Connie,

Wondefful post! You are right on with being prepared and knowing how to educate your buyers and sellers!

Posted by Dorie Dillard CRS GRI ABR, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.750.6899) over 8 years ago

Connie, posts are great but HVCC only destroyed the appraisal profession.  The regulations now in effect are the Dodd-Frank Act which basically took over from HVCC.  Bottom line, underwriters need to be more concerned with the ability of the borrower to pay the mortgage than to critique appraisal reports for which they have no training and are only able to make sure it fits in the box.

Posted by Richard Glesser (North Country Appraisal Services) over 8 years ago

We are definitely doing a disservice to our clients if we are not prepared and able to explain the nuances of the client's options and alternatives - whether the appraisal fits the box or not.  Thanks for this post, Connie!

Posted by Karen Hawkins, MBA - Langley & Surrey, BC (Royal Pro Real Estate Network) over 8 years ago

Hi Connie,

I recently had to challenge an appraisal. It was $70,000 or more over market.

I had to research every one of the six comps they used.

Not a single one was a good comp.

I concluded my lengthy report with the statement, "This appraiser should be fired"



Posted by Phil Leng, Phil Leng - Retired (Retired) over 8 years ago

HI CONNIE! Overcoming challenges - buyers and sellers do not realize how valuable it is to have someone on their side to help with these issues!  Nice presentation of things we need to be familiar with!

Posted by Gabrielle Kamahele Rhind, Broker/Owner (KGC Properties LLC, Tucson Property Management & Real Estate) over 8 years ago

Thanks to all for your visit and comments!

Judith - that is one point of difference a good Realtor can bring to the table.  Being up to date on appraisal requirements is huge!  Representation at its best.

Dorie - Educate and knowing how to visit without sounding negative.  Keys components as we work through potential problems.

Richard - thanks for the clarification.  The box .. the one hated by appraisers and Realtors as well.  I just wish they would step back and allow appraisers to render values and explain.  Not just toss out as unacceptable because the rules were not followed due to a unique/difficult property.

Karen - you are absolutely right - we have a responsibility to stay up on the rules.

Phil - Don't you wish we had the authority to do so?  There are a few that would be unemployed by now!

Gabrielle - That is a great way to put it - having someon on their side that can help with the issues. 


Posted by Connie Goodrich, CRS ABR (McKinney Realtor)Texas (Keller Williams Realty) over 8 years ago

Good Morning Connie, excellent input on working with the current appraisal process.  I just read Karen's repost.

Posted by Dan Edward Phillips, Humboldt and Del Norte Counties, CA (Dan Edward Phillips, Humboldt and Del Norte Counties, CA) over 8 years ago

So true. Education on eveyones part mixed with honesty would make for a wonderful world.

Posted by Craig Chapman, The Value Guy (Call Realty / Access Appraisals) over 8 years ago