Stricter Rules For Home Appraisals

Stricter Rules for Home Appraisals For home buyers and sellers, the days of problem free appraisals may be a distant memory. There are many complex reasons for the change, however, mortgage lenders are definitely taking a closer look at home appraisals, in some cases ordering second appraisals. Experts believe that the increase is due to past problems in the home loan industry. Some appraisals may warrant a second look if the borrower is deeply in debt or has a low credit score. Appraisals for “flipped” homes may also require a second look. Also as home prices begin to rise, appraisals need time to catch up because an appraisal is based on past sales. So if a desirable home commands a high asking price, the appraisal can come in at a lower price based on past sales. The reverse of this is also true. Sometimes there are simply no “comps” for a particular property. There may be no recent sales of similar properties in that area. Short sales and foreclosures present another problem for appraisers, driving prices down. If any of these is the case, a lender may order a review of the appraisal or even a second appraisal. In a second appraisal, the appraiser starts all over again. If a review is ordered, it may be a “desk review” where a second person reviews the data, or a “field review”, this is where someone is sent out to inspect the property. More often, it is a review, rather than a second a appraisal that gets ordered. The cost is usually to the buyer. These stricter standards are a good thing, because in the long run everyone benefits, but it is more expensive. Home sellers and real estate brokers can be very helpful to appraisers. Good real estate agents are aware of these issues and know how to handle them. The appraisers are not chosen by the buyer or the seller but they can insist on licensed appraisers with local market knowledge. 45 and 60 day closings are also becoming more common. A buyer pays a fee for the appraisal and they are entitled to a copy of it. They should review the appraisal carefully and make the lender aware of any errors that they find. know what your home is worth! Find out how the real estate market is doing in your neighborhood