Questions about the Appraisal Process

By
Real Estate Broker/Owner with Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 DRE# ER40011786

 

The home of your dreams is almost yours....the offer got accepted, the inspection went well and now for the appraisal!  BUT, we have questions....

 

Who attends the appraisal?

The appraiser will be in attendance and the listing agent (if available).  Unlike the inspection, Sellers do not need to leave the home while the appraisal is being done.  In fact, sometimes the appraiser wants to know dates of when certain upgrades were done to add to their report.   

 

How long with the appraisal take?

A conventional appraisal takes only about 30 minutes, as they measure the exterior, and portions of the interior and make notes on upgrades and features.   If it is an FHA or VA appraisal, there are more items for the appraiser to check, and could take 45 minutes.

 

When will we hear what the value is?

The appraiser turns the appraisal into an AMC (Appraisal Management Company), which reviews it first, then it gets emailed to the lender.    In most cases, the underwriter or quality control department want to review it prior to releasing any information to verify the information is correct.   This can take up to a week after the appraisal has been done.

BUYERS - you will get the value information from the appraisal and a copy of the appraisal.

SELLERS - you will hear if the value came in under the purchase price, or if the appraisal came in at list price or higher.   IF the appraisal came in higher than list price, you will not hear this information, only that it came in at value.   (The buyer pays for the appraisal.)

 

If the price needs to be adjusted for the appraisal if it comes in UNDER purchase price, why can't we increase the price if the value comes in OVER the purchase price?

Wish this would happen!   The bank won't lend the amount to the buyer if the appraisal comes in UNDER the amount, and only if the buyer offers to bring the shortfall to the table, most often the seller will need to reduce the purchase price.   (This did not happen around Denver in early spring when there were 15+ offers received.)   If the value comes in over the purchase price, the buyer will see a bit of instant equity.

 

What happens when the square footage is much different on the appraisal than what the listing agent disclosed?

If the appraisal has a significant amount of square footage LESS than what is listed in the MLS, there could be a problem with the value.    Usually a listing agent bases their purchase price on like property with similar square feet.   I once saw a home that had filed for a permit adding 350 square feet to the home, but never finished.   This amounted in a very low appraisal!     If there is more square footage, again, the buyer most likely will see instant equity!

 

The inspection and appraisal are the two largest hurdles in the transaction.   

 

 

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Metro Brokers - House to Home, Inc.House to Home

GRI, CRS, CNE, e-Pro  

Broker/Owner

Joan@JoanCox.com

720-231-6373

 

Denver Real Estate

Homes for Sale in Denver

Neighborhoods in Denver

 
  A Denver Metropolitan Realtor

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Ginger Harper 07/12/2017 07:52 AM
Topic:
Home Buying
Location:
Colorado Denver County Denver
Tags:
the appraisal process
questions on an appraisal

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Show All Comments
Rainmaker
124,479
Stavrula "Sam" Crafa, RNC,GRI, CDPE, PSA
Future Home Realty - Seminole, FL
Providing the integrity and service you deserve.

It's very rare that an appraisal comes in below the contract price in our market. What we usually see is the appraisal comes in either at contract price or $5000 above contract price. But I have heard of appraisals coming in below. 15 years in this business and coming in below has only happened to me once and the buyers loved the house so much, they brought the extra money to the table. Great post with great information for both buyers and sellers. 

Jul 12, 2017 07:12 PM #49
Rainmaker
57,670
Bruce Minter
The Real Estate Group - Virginia Beach, VA

Square footage? Is it right or wrong? I work a condo community where all the comps have used the original builders square footage from day 1, the tax roles use the same number and have for the past 15 years since built. Everybody agrees the Bocha model is 1909 square feet, the Ashley model is 1778 square feet etc. My last listing goes under contract and here comes a young, enthusiastic appraiser bounding up the steps, taking two at a time and whips out an electronic measuring device. Read shiny object and we all know they aren't any good unless you know how to use them. Well he spent 90% of his time trying to measure. Did every room at least twice aiming at different points and then announces he thinks my square footage is wrong and wanted to know how I came up with my number. Every comp I gave him had the same number and has had for years and was established by the original builder and matches the tax roles I told him. He chose to believe his shiny object. In the end the 100 or so feet difference didn't affect value to the point of a problem, but geesh! 

Jul 12, 2017 11:02 PM #50
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Jeff, I am sure there are things I could add to the post, but hopefully will be informative.

Jul 13, 2017 06:01 AM #51
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Hella, I agree, but hopefully with the listing agent and the homeowner can assist with these questions.

Jul 13, 2017 06:02 AM #52
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Nick, I have met several this week for my listings, and all were appreciative for the information I provided, thankfully.

Jul 13, 2017 06:03 AM #53
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Sheri, I have seen this too - was watching someone else's business, and the homeowners had filed a permit adding onto their home, but never did.  Value did come in very low.

Jul 13, 2017 06:03 AM #54
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Caroline, these items are usually identified in the inspection in CO, unless the appraisal is FHA or VA.   Great addition!  

Jul 13, 2017 06:04 AM #55
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Lou, it is an inportant part of a transaction, and many have questions.

Jul 13, 2017 06:05 AM #56
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Sam, you are lucky, with our multiple offers earlier this spring when our inventory was extremely low, we saw low appraisals frequently.

Jul 13, 2017 06:06 AM #57
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Bruce Minter I have seen this too, and those enthusiastic appraisers!    Glad it did not affect your value.

Jul 13, 2017 06:07 AM #58
Rainmaker
37,368
David J. Caracausa
The Premier Properties Group - North Wales, PA
ABR, CRB, CRS, GRI, SRES, CRE

A great read. Thanks

Jul 13, 2017 06:44 AM #59
Rainmaker
299,228
John Wiley
Jones & Co. Realty - Fort Myers, FL
Lee County, FL Real Estate GRI, SRES,GREEN,PSA

An appraisal can be very confusing to the consumer and sometimes to agents.

You have laid out the details well.

Some appraisers are very appreciative to have your CMA to see the comps you used. Other appraisers do not even want to talk to the agent.

Thanks for providing such good information Joan.

Jul 13, 2017 06:49 AM #60
Rainmaker
1,340,941
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
your real estate writer

It is so sad that those management companies have gotten in the middle of this. Back when I was an agent it was always bad news when a lender chose an out of area appraiser, but thankfully it didn't happen often.

Now, from the stories I hear, it's almost the norm to send in an appraiser who is completely unfamiliar with the area, the comps, etc.

Jul 13, 2017 09:44 AM #61
Ambassador
3,617,660
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Joan, I am such a fan of the lenders who use local appraisers who actually know the neighborhoods.  

Jul 13, 2017 10:03 AM #62
Rainer
381,961
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Joan,

Good description. 

Jul 13, 2017 10:34 PM #63
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

David, thank you for stopping by and commenting! 

Jul 14, 2017 07:12 AM #64
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

John Wiley we are finding more appraisers that appreciate the info we provide versus the others.    Usually you get the hint when they call for the appointment - "can I get into the home tomorrow morning at 7 am", which means they don't want you there!  

Jul 14, 2017 07:13 AM #65
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Marte Cliff I ask every appraiser about their expertise, and rarely find anyone from out of the area now.   Our sales have slowed a bit, so finding appraisals are being done quicker and by those knowing the neighborhood.

Jul 14, 2017 07:14 AM #66
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Patricia Kennedy have a couple lenders that have "in-house" appraisers and love it when their appraisers know the neighborhood!   Nice to see you!  

Jul 14, 2017 07:15 AM #67
Rainmaker
3,284,025
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Dorte, I have not experienced an appraiser that was not experienced.   BUT, did have a rural appraisal done lately that required a field review!  

Jul 14, 2017 07:16 AM #68
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Rainmaker
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Denver Real Estate - Selling One Home at a Time
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