Easy Tips to Avoid Appraisal Delays

By
Services for Real Estate Pros with Escrowcoord.com

Bad day at the office Are you wondering why it takes so darn long to get an appraisal report completed lately? This information will give you the secret tools needed to punt kick the process into high efficiency gear!

New lending laws have put a cog in the wheels in Real Estate Land. Back in the good ole' days, as soon as a contract was consummated, the loan officer would order an appraisal.

No can do anymore! The loan officer must now obtain the borrowers approval of a good faith estimate prior to ordering an appraisal. So what does this have to do with you?

Before the loan officer can obtain the numbers for the good faith estimate (GFE), they need the escrow officer to create an estimated HUD1 or settlement statement showing all the credits and debits for the buyer . This includes escrow, title and loan fees, commissions, costs for inspections and home warranties paid through escrow.

Before the escrow officer can prepare the estimated HUD1, she needs commission demands and terms (who pays for what and how much) from the real estate agent! 

If you are located in a state or area where it's customary for you to deliver demand and terms at the end of the escrow or pending sale period, you will be waiting a LONG time for an appraisal report to be ordered and completed.

If you are located in an area where it's customary for  the escrow officer to pull the information off the contract directly, be sure you are providing her with costs ASAP IF know what they will be.

CHANGE YOUR SYSTEMS! My company has a new rule to submit agent demand and terms to the escrow officer within 48 hours of opening escrow. 

Now you have provided the tools the escrow officer needs to prepare the estimated HUD1 so the loan officer can deliver his GFE and then order the appraisal in a timely manner.  

Who knew we work in such a tangled environment?!

Comments (26)

Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Keith-I hear your frustration. Anyone out there have any great work-around solutions to this?

 

May 06, 2010 08:06 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Duane, you are so correct! It pays to ask for a copy of the appraisal report for both the buyer and seller agent's review. Tsk-more work us though!  Thanks for your comment!

May 06, 2010 08:08 AM
Bill Burnett
Homestead Mortgage, L.C. - Lorton, VA
President, Virginia Assn. of Mortgage Brokers

Diana, the work around for Keith is get rid of HVCC. There are proposals on the floor of congress as we speak to do just that.

Marilyn, you can't order 2nd appraisals anymore for "value shopping" purposes. I was able to get a 2nd appraisal recently but it was because the appraisal was so deficient that the underwriter rejected it outright. That's the first time in 30 years that I have had an appraisal rejected outright for quality. What does that tell you about the quality of the appraisers that are providing such an important contribution!!

Bill Burnett
President
Virginia Assn. of Mortgage Brokers

May 06, 2010 08:17 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Bill, I have recommended to California Association of Realtors to change the templated loan approval due date from 17 to 21 days. In my opinion it is nearly impossible to get full loan approval with all prior to doc conditions met and approved prior to this timeframe! Thanks for your comment!

May 06, 2010 08:41 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Bill and Marilyn, seems to me the appraisal reviews are now the rule, not the exception. Another reason why it's tough to remove a loan contingency in 17 days or less!

May 06, 2010 08:43 AM
Bill Burnett
Homestead Mortgage, L.C. - Lorton, VA
President, Virginia Assn. of Mortgage Brokers

Banks will not accept a pending sale as one of the three required comps. But, appraisers will often include one or two additional comps that are pending sale to help support the value of the other comps. They are used to help when the appraiser is using the upper end of values (stretching). Underwriters will give very little value, if any, for those comps but they are ammunition if you need it to justify a higher value on the subject property that is not bracketed by the other comps. Good appraisers will always include at least 2 additional comps pending sale in a market that is moving upward. It's kind of like showing a future value.

Bill Burnett
President
Virginia Assn. of Mortgage Brokers 

May 06, 2010 10:22 AM
Christianne O'Malley
Dickson Realty - Reno, NV
Exceptional Service - Delivering Results in Reno!

We include this information on the cover sheet to our office manager when we open an escrow with a copy to the escrow officer. This helps us avoid these timeline delays. This is a great post to call to attention the value of information and how providing it early helps avoid costly delays down the road.

May 06, 2010 10:27 AM
Betsy Schuman Dodek
Washington Fine Properties - Washington DC Area Real Estate - Potomac, MD
SearchPotomacHomes.com

We seem to be getting appraisals done in 5-7 days but it depends on the lender.

May 06, 2010 10:33 AM
Bill Burnett
Homestead Mortgage, L.C. - Lorton, VA
President, Virginia Assn. of Mortgage Brokers

Betsy,5-7 days to get an appraisal done is about average. The problem is that because of the new Mortgage Disclosure Act (MDIA) it could be as much as 7 days before the borrower has acknowledged receipt of the GFE and TIL, then the appraisal is usually ordered. This means you can be as much as 12-14 days into the process before you get your appraisal back. This processs used to take me, at the most, 3-5 days from application.

Bill Burnett
President
Virginia Assn. of Mortgage Brokers

May 06, 2010 10:44 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Bill, really the only way we can possibly see a rise in prices is if underwriting takes some pending sales into consideration OR if the buyer's are willing to come up with additional cash to close escrow. I don't see too many buyers willing to do this yet with our current market conditions and cash reserves are a bit tight for most buyers right now. But something has to give!

I heard there is another delay that can occur when the price is reduced on the proprerty after the initial appraiser has done his thing. Loan app has to be re-submitted, new appraisal completed?

May 06, 2010 11:32 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Christianne! Awesome to hear you're on top of this! Thanks for the vote of confidence!

 

May 06, 2010 11:38 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Betsy, I've had appraisals held up as long as two weeks because the escrow officer did not have time to prepare the est. HUD1. Throw in a looming short sale expiration date and this transaction has become a chocolate pudding mess!

May 06, 2010 11:41 AM
Bill Burnett
Homestead Mortgage, L.C. - Lorton, VA
President, Virginia Assn. of Mortgage Brokers

Diana, The values are going up in my area a little at a time because of what appraisers are doing in my previous post.  They are going to the upper end of values for all the adjustments on the comps supported by additional pending sale comps. Yes, this means that values at the beginning will be going up very slow but as the volume picks up then the values will pick up as well.

When the sales price is reduced then that causes a change in the APR that was disclosed in the original Truth In Lending disclosure. Because the APR has changed then everything must be re-disclosed again and the borrowers will need to wait seven days before they can close. I just had a client renegotiate a sales price 2 days before closing so the seller could contribute closing costs. Guess what....the APR changed and we missed closing by a week. Washington polititians......you gotta love 'em (not really) but they have no idea what they are doing to the lending and real estate industry or the consumer who usually gets hurt the most!

Bill Burnett
President
Virginia Assn. of Mortgage Brokers 

May 06, 2010 11:47 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

I've been recommending my agents think really carefully when trying to negotiate the sales price down after acceptance. They need to prepare thier clients for delays in closing and the possibility it might just blow the deal out of water!

May 06, 2010 12:03 PM
Cheryl Ritchie
RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD
Southern Maryland 301-980-7566

This is a good post to lay out the importance of timing and puntuality.

May 06, 2010 12:17 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

The rules keep getting more and more complicated.  Having to wait for so many parties can only delay things.

May 06, 2010 04:44 PM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Christine and Cheryl! In order to get our deals closed, it's imperative we all work together as a team to problem solve. Thanks for your comments!

May 07, 2010 06:31 AM
Anonymous
Jim Larsen

HVCC has definitely changed the landscape for the lending world.  My company, RPM Mortgage, has adapted by developing our own affiliated AMC.  This doesn't change the regulations but we have control of the qualifications, geographic competence of the appraiser, etc.  This has proven to be extremely valuable as a competitive edge for my business. 

May 10, 2010 01:23 PM
#24
Anonymous
Paul

Your comments are great. But for the average buyer like my wife and I who have been waiting for over ten days for the appraiser to complete his/her revisions, there is no consolation. (We suppose to close on a REO in 2 days but it's not going to happen.)

Jul 12, 2010 04:07 PM
#25
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Paul, my sympathies go out to you. It can be very frustrating for a buyer to weave and bob through the lending nightmares that are happening right now. In your situation, it sounds like the mortgage broker you're going through to get the loan is using a "government controlled" pool of appraisers and has absolutely no control over how soon reports are completed.

There is only one thing you can do. Beg and plead for an extension. The REO asset manager may give you the extra time if you are an otherwise strong buyer and you've removed all other contingencies (inspection, etc.). Also, ask to waive the penalty fee for closing late.

If they don't go for it, then you need to be prepared to walk away from the deal. I know that's a hard reality, and sometimes it doesn't seem fair. Unfortunately, this is the way the market is right now. I also suggest that next time you find a lender who has their own pool of appraisers so you won't run into this type of delay again. I wish you the best of luck and remember to be good to yourself!

Jul 13, 2010 04:09 AM