You know appraisals are an essential part of the real estate business. You’ve worked with appraisers before. Yet many agents are confused about what appraisers do, what is allowed in the appraisal process, and how agents and their clients can work with appraisers.

Texas REALTOR® magazine asked two licensed real estate brokers who are also certified appraisers, Angelo Amoriello and Candy Cooke, to help clear up misconceptions about how to work with appraisers.

“Don’t look at the appraisers as the speed bumps,” Cooke says. “We are the seat belts. We keep consumers safe by valuing the properties at what they’re truly worth. We also keep the entire lending industry safe. Backing up our appraisals with data helps avoid the practices that led to the 2007-2008 financial crisis.”

Do Not Try to Influence an Appraisal

Buyers pay the bank for appraisals, but appraisers do not work for buyers. Lenders hire appraisers as impartial third parties to figure out a property’s market value. Therefore, the lender is the client. Value is determined by many factors, including location, condition, improvements, amenities, and market trends, according to the Appraisal Institute.

“We are tasked with determining how much this property is worth, and we have to have documentation to back it up,” Cooke says.

Appraisers are required to be completely unbiased. The appraiser certifies that the appraisal was objective before delivering it to the lender. The lender then uses the appraisal to determine how much money to loan the homebuyer. “If the bank lends this money to a borrower and in a year the borrower defaults, can the bank sell that property and get all of its money back? That’s what this is all about,” she says.

Regardless of the sale price, the lender will only lend money based on the appraised value. You or your clients cannot influence appraisers to arrive at a certain value. If you or your client attempts to do so, appraisers will likely ignore it—they may even walk away from the assignment.

Do Talk With Your Appraiser

Many people think you or your client cannot talk to an appraiser at all. That’s not true. “It should be a two-way street,” Cooke says. “The agent and client should provide important documents to the appraisal, and the appraiser should be asking follow-up questions. ‘Has anything been done to the house in the last year? Is there anything unique about this area?’” If an appraiser isn’t asking those questions, it’s even more important for you and your client to provide information.

Agents and clients may not realize that background information—the kind that may not show up on a report or in a database—is important for appraisers to know, Amoriello says. Without that communication, the appraiser could miss a key detail, such as if the homeowner chose a higher quality countertop material than what is common in the neighborhood.

Cooke says agents can show an appraiser a comparable market analysis. But tell the truth, she emphasizes. “If you’re going to give sales information, make sure it is similar to the subject property. Don’t give an appraiser overvalued or unrelated comp data just because it would make the price work,” she notes.

You and your clients cannot talk to an appraiser after the appraisal has been submitted; you must speak with the lender.

Do Not Expect a Dollar-For-Dollar Return on Renovations

Many people think a $20,000 renovation means a $20,000 increase in home value. Improvements such as bathroom and kitchen remodels do raise home values, but not usually dollar-for-dollar, Amoriello says.

Clients who have made huge improvements out of sync with what is normal in their neighborhood may be in for a shock: those improvements do not significantly raise their home values. This is called superadequacy.

Imagine homeowners expanding their home from 1,400 to 2,200 square feet of livable space by converting the garage and adding a sunroom. The rest of the neighborhood’s homes range from 1,000 to 1,400 square feet. Or perhaps a homeowner installed an indoor pool. Without comparable sales of similarly sized houses or indoor pools, the appraiser will have a hard time assigning a value to these improvements.

Amoriello says an appraiser could assign a value in use based on the cost of the amenity minus a depreciation schedule, among other criteria. But an assessment may be lower than the homeowners expected.

Do Not Think Overvaluations Help You

Say an appraiser really likes a certain home feature, such as in-ground pools, and significantly overvalues your client’s pool without justification. If this overvaluation is not caught by an underwriter reviewing the loan application, that could be a problem for your client and the appraiser.

A year and a half later, the client wants to refinance and learns their $375,000 property was only worth $325,000 when correctly appraised, Amoriello says. The client now owes more money than the home is worth. Even if the home significantly appreciates in value, the client doesn’t benefit because they still owe the full amount of the loan based on the higher, incorrect appraisal.

Meanwhile, the appraiser may be subject to lawsuits or penalties by the Texas Appraiser Certification and Licensing Board.

Do Try to Be Flexible

There may be delays outside of the appraiser’s control. For example, the appraisal may not even be assigned for several days while the appraisal management company tries to locate an appraiser willing to do the appraisal for a specific price. If the appraisal management company cannot find an appraiser who will accept the fee it is offering, the appraisal management company will keep trying until it does, Cooke says. That’s one reason why appraisals end up getting done after the lender’s timeline.

One way to help expedite the appraisal process is for agents to return phone calls and be flexible, Cooke advises. If you cannot meet during the times an appraiser is in your area, you may fall to the back of the list. “Understand that appraisers are so busy right now that when they’re trying to set appointments, if you don’t try to work with them, they’re just going to go to the next one,” she says.

At the end of the day, all of the parties involved in the transaction have different jobs. “The listing agent is trying to get the highest price. The buyer’s agent is trying to get the best price. I’m trying to get market value,” Cooke says.