Beginning in September of this year, Appraisers were introduced to a new set of standards as it relates to the appraisal of residential properties. This change was mandated by GSE’s (Government Sponsored Enterprise) of which Freddie Mac and Fannie Mae are examples. How will this change in the appraisal process affect your ability to buy or sell Smith Lake property? Will there be additional procedures which one must follow? What about lenders, how do they fit into the new process? What necessitated these regulation changes? Follow along as we explain the basics. Acquiring this information now will save you time and resources when handling a Smith Lake real estate sale or purchase in the future.
The mandated changes were put in place to reduce the likelihood of appraisers assessing differing values when appraising a specific property. Prior to this mandate, appraisers, lenders, and underwriters utilized a number of different processes/programs to assess the value of residential property. Lenders and underwriters quite often required the use of varying appraisal formulas. As a consequence, there was little in the way of a requirement by individual appraiser’s, to include “uniform” information in determining value while completing an appraisal. When Smith Lake residential real estate was booming a few years ago and valuations were rising, the level of risk assumed by a lender with regards to fluctuating valuations was negligible. Today, it’s a whole different story. With residential valuations currently stagnant in most regions of our country, lenders and underwriters have become increasingly cautious when it comes to receiving accurate, timely appraisal reports. For the next several months, the appraisal industry, lenders, real estate attorneys, realtors and underwriters will continue the task of implementing these new mandates. Will there be some confusion, delays and problems – anytime there is change you can bet on it. As the mandates become fully operational, it is hoped that consumer’s will benefit from an improved uniform appraisal process.
The numerous mandates which have been implemented by the GSE’s have caused many other changes to occur. Until recently, many lenders used AMC’s (appraisal management companies) to perform their appraisals. While the concept seemed a viable alternative to using an individual appraisal firm, in practicality, it created its own set of issues. Without getting specific, many new situations developed and as a result, the FDIC modified their regulations as it pertained to the use of AMC’s by lenders in November of 2010. As a side note, the State of Alabama assumed regulation of AMC’s operating within the State earlier this year (2011). Many lenders, banks and mortgage companies continue to use AMC’s. To this day, they remain a viable alternative. What should a consumer look for when needing an appraisal? If your need for a Smith Lake appraisal does not involve a lender/refinance, make sure you confer with an appraiser beforehand to assess his ability to handle your specific situation. For example, having an appraiser assess the value of your residential rental property, only to find out after the fact, the majority of his appraisal business deals with farms and vacant land may not be in your best interest. If you are requesting an appraisal as part of a mortgage loan/refinance, your ability to influence the lender regarding the choice of an appraiser is nonexistent. You can ask the mortgage company if they use individual appraisal firms familiar with the Smith Lake area, or if they utilize the services of an AMC. If they indicate the latter, understand the appraiser may not be from the local area and his access to all pertinent MLS data may be limited, as a consequence, the comparables he or she uses may differ from that of a local appraiser.
An appraiser will take many factors into consideration when performing an appraisal. Depending on the specific situation, such as rental property, distressed property, or refinance, he will use the appropriate appraisal method(s) to determine value.
Again, because of recent changes mandated by GSE’s as it relates to appraisal and residential mortgage financing, the process as a whole has become more involved. Make sure you allow adequate time for the entire process to reach completion.
When seeking the help of an appraiser, ask him what recourse you will have with any questions which might arise following the valuation of your Smith Lake waterfront property? Keep in mind, the valuation of any property has a lot to do with the amount of current information available. For your part, maintaining adequate records and receipts will go along way towards substantiating any remodeling, repair, or major maintenance, which you have invested in your Smith Lake improved property. It would be advisable to provide all pertinent documentation to the appraiser prior to his visit to your property.
For more detailed information regarding appraisal practices and/or lending requirements, contact an appraiser or mortgage lender who is familiar with Smith Lake.