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Looking for answers or clarification regarding the residential appraisal process? Following are frequently asked questions of the National Association of REALTORS® that will help you provide guidance to your clients about the appraisal process.
Q. Will the homebuyer receive a copy of the appraisal?
A. Yes. The Equal Credit Opportunity Act (ECOA) requires creditors to automatically send a free copy of home appraisals and all other written valuations on the property after they are completed, regardless of whether credit is extended, denied, incomplete, or withdrawn.
Q. What kind of information should I provide to the appraiser?
A. Prepare an “Appraiser’s Package” in advance and have it available for the appraiser at the property. The package could include plats, surveys, deeds, covenants, HOA documents, floor plans, specifications, inspection reports, neighborhood details, recent similar-quality comparables, detailed list and dates of upgrades, remodels and costs, and energy-efficient green features. Meet the appraiser at the property and answer any questions an appraiser might have about the property or neighborhood. Allow the appraiser the necessary space and time to complete the inspection.
Q. Can I speak to the appraiser?
A. Yes! Regulations allow real estate agents, or other persons with an interest in the real estate transaction, to communicate with the appraiser and provide additional property information, including a copy of the sales contract. An agent, or other persons with an interest in the real estate transaction, may not intimidate or bribe an appraiser and an appraiser may not disclose confidential information at any time. More information on communicating with an appraiser may be found at REALTOR.org/Appraisal/Appraiser-Independence.
Q. Who do I talk to if I feel the appraisal value is inaccurate in any way?
A. Once an appraisal assignment is completed and sent to the appraiser’s client, typically the lender, an appraiser may not discuss the results of the report to anyone but the client who ordered the appraisal, or parties designated by the client. In order to ask an appraiser to correct errors in the appraisal report or consider additional information, you must contact the appraiser’s client in writing.
Q. Why does the lender give the appraiser a copy of the sales contract?
A. The Government Sponsored Enterprises (GSEs) require that an appraiser analyze the sales contract and the appraiser must confirm analysis of the contract on the appraisal report. The appraiser looks at the terms of the sales contract and compares them with what is typical in the market. The sales contract has information such as the interest rate, the down payment amount, seller contributions or other personal property items that might be included in the sale. The appraiser must also verify if the property seller is the owner of public record.
Q. Why do appraisers sometimes take assignments if they live outside of the market area?
A. Appraisers are required to be competent in the geographic area where they are working. Some appraisers work in cities and counties beyond their residence, but are knowledgeable about those specific areas. If you suspect that an appraiser is not competent to appraise in your area, you may contact the lender who is the appraiser’s client.
Q. Does a buyer’s choice of financing impact the appraisal process?
A. Yes. The appraiser must comply with the Uniform Standards of Professional Appraisal Practice (USPAP) and appraisal regulations, but also follow any additional requirements from the mortgage lender, Freddie Mac, Fannie Mae, FHA, USDA and VA. For instance, some loans will require the property to meet certain minimum property requirements.
Q. How long does the appraisal take?
A. The turnaround time for a full residential appraisal report varies depending on the complexity of the assignment.
Q. How should I prepare my client for the appraisal?
A. At the beginning of the sales process, discuss the appraisal process with your client. If your buyer or seller is unfamiliar with the appraisal process, provide a link to The Appraisal Foundation’s “Guide to Understanding a Residential Appraisal” that can be found at Realtor.org/Appraisal. The appraiser develops an independent, impartial and objective opinion of the value of the property. The appraised value may not always support the sales price of the home.
Q. Who orders the appraisal?
A. The mortgage lender orders the appraisal and is the appraiser’s client. Sometimes a lender will use an appraisal management company (AMC) to manage the appraisal process. An AMC will order an appraisal on behalf of the lender. Some lenders order the appraisal directly from an appraiser.