Policies and Procedures & Appraisal top FAQs . Here we cover some of the most frequently asked questions regarding appraisal practice and procedures from homeowners and agents.
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Can an Appraisal be sent or transferred to a different lender or client?
The simple answer is no. This is not permitted by USPAP. Therefore, most lenders will not accept a transfer of appraisal for conventional financing. More often than not, you must pay for a second appraisal when changing lenders on a Conventional loan. Also, the appraisers do not send appraisal reports to any other party except the Lender/Client identified in the report. To Summarize, a new client means there is a new assignment that necessitates the preparation of a whole new report with a new effective date.
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How Long Is An Appraisal Valid For Lending Purposes?
In lending, an appraisal is typically valid for 120 days (four months) from the completion of the appraisal report. It means the lender can rely on the appraisal to assess the property’s value for loan purposes during that time frame. Many individual lenders will have specific policies regarding the validity period of appraisals. Changes in market conditions or significant alterations to the property may also prompt the lender to request an updated full appraisal enven after 30 days. An appraisal update is sometimes ordered by lenders once 120 days are exceeded but less than 6 months. This is to ensure the property’s value has not declined or at the very least has stayed the same.
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What are the State Licensing Requirements for Appraisers?
Every State requires an appraiser to be licensed or certified. All appraisers must go through a period of holding a trainee licence to get the appoved 2000 hours to apply for licensing. In addition, a certified appraiser must obtain 2500 hours of approved experience and pass the state certified residential appraiser examination. It is required that all federally associated transactions having a transaction value of $1,000,000 or more will need an appraisal prepared by a State certified appraiser.
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What are the options for buyers and sellers on low appraisals
Based on national average 1 in 9 home appraisals come in low. As a result, whenever the appraised amount is less than the contract, the following steps that are provided below may be taken.
Seller reduces the price
In many cases , the seller decreases the price to match the appraisal. Above all, most sellers prefer to close sooner than go back on the market as well as make another mortgage payment. In addition, the home needs to be sold in a certain timeframe if the sellers have already closed on another home. Also, the seller has a contingency offer being delayed. There are many reasons for motivated sellers.
Buyer walks way from the sale
The buyer walks away from purchasing the home. It is best practice to have an appraisal contingency addendum in the state of Illinois. It is a buyers right to walk if the property comes in low or move ahead under agreed upon conditions.
Client requests a ROV
The client can request a reconsideration of value (ROV) to the original appraiser with supporting sales data or report data errors. These rarely change value unless large omissions have happened that supports changes to reports warranting new sales. However, It is all to common for appraisers to receive a ROV with a list of sales to use or address why they were not included. Typically these sales come from the collateral underwriter report. The CU report shows sales data including the sales the appraiser has used highlighted on a list of the 10 to 20 or more best sales considered by CU analytics. Sales ranking above the appraisal report sales will be questioned as to why they are not relevent or be included if comparable properties.
Sellers require a Gap Addendum to the contract
Seller in rapidly increasing and competitive markets can require an Appraisal Gap Addendum that is signed by the buyer with the contract to ensure the sale goes to closing regardless of the appraised value. Accordingly, this is used most often when there are bidding wars with multiple offer or rapidly changing market conditions.
Sellers pay for a second appraisal
A seller can request the lender to order a second appraisal by another appraiser. To accomplish this the sellers must prove errors made that directly impact value or comparable selection. The seller must have a good understanding of the appraisal process. In addition the ability to communicate these errors to the lender in a compelling manner without bias. A review report or 2nd appraisal is typically paid by the seller out of pocket. Most importantly, the report must be reviewed or appraised by the appraisers peers having similar geographical competency. The seller can not choose another appraiser.
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Who are the appraisal intended users ?
An appraiser will identify all Intended Users in the appraisal report by name. Also, the appraiser assumes no obligation, liability, or accountability to any third party use. For lending purposes the borrower or mortgagee as well as ther seller are not considered an intended user. Specifically, the appraiser does not send appraisal reports directly to borrowers, real estate agents or sellers per lender confidentiality and ethics guidelines. Borrowers can only request the appraisal from the lender. Futhermore, borrowers ultimately have the right to view the full detailed appraisal report on the property they are purchasing, under the Equal Credit Opportunity Act or ECOA. The lender will provide a copy of the report typically 3 days before closing or sooner.
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What are the key things to know about the appraisers interior visual inspection
To begin, appraisers make property visits to measure, take photos observe the properties characteristics, condition and more. Therefore, when the appraiser asks about the upkeep and updating, having the proper details about your home is key. Hence, including any maintenance records or receipts for repairs or new mechanical’s is beneficial. While the appraiser is present, it’s your best chance to give important details that can relate to your home value. The more accurate and detailed the data the better supported your value conclusion will be. See our blog post for 7 tips to prepare for an appraisal for more information.