Understanding the Residential Appraisal Process

The appraisal process is an important, and sometimes unclear time in a homes sale. Understanding what you as an Agent can/have to do during the appraisal process is key to getting an accurate valuation and keeping your clients happy! So here are a few of the most commonly asked questions answered.

Who decides on the appraiser?

The appraiser is selected by the mortgage lender. In some instances a lender will use an appraisal management company (AMC) to manage the process in which case the AMC will order an appraisal on behalf of the lender. Unfortunately neither you, nor your client, will have any say in this. Also while the lender selects and orders the appraiser, you as the agent, will still have to pay for the process which will usually run you $400-$600.

What information should I provide to the appraiser?

In order to make sure that the appraiser is working with the best/most accurate information it is good to provide the information needed by him yourself. This includes  deeds, covenants, HOA documents, floor plans, inspection reports, neighborhood details, comparable homes, detailed list and dates of upgrades, remodels and costs, and other special features of the home.

Is the process impacted by the type of financing?

The short answer yes. The long answer is that there are two sets of regulations in any appraisal process one from the Uniform Standards of Professional Appraisal Practice (USPAP), and the other from the lender themselves. So different lenders/loans may require the property to meet certain criteria that other don’t.

Will the buyer see the appraisal?

They will. The Equal Credit Opportunity Act (ECOA) enacted back in the 70’s stipulates that creditors must send a copy of home appraisal and all other written valuations on the property to the buyer, regardless of whether credit is granted or denied.

What do I do if the appraisal is inaccurate?

Once the appraisal is finished a sent in to the lender, legally the appraiser can not speak about the appraisal with anyone other than the client (Lender). So in order to request a correction of any errors you must contact the lender in writing, then if they find the grounds of the request reasonable, they will contact the appraiser and request and review.

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