How to Get Involved in Your Home’s Appraisal

How to Get Involved in Your Homeâ€™s Appraisal

January 27, 2012 1:26 am

Home appraisers are in the news a lot these days as many housing pundits blame inadequate appraisals for lagging home sales. As a real estate consumer, you can take matters into your own hands by becoming as informed as possible about the appraisal process. The following tips are from the Appraisal Institute and break down the key facts you need to know about appraisals.

Appraisals directly affect your mortgage. Lenders order appraisals to get a stronger understanding of risk relating to the underlying collateral offered in a mortgage. Lenders want to know how much the property could sell for so that they can make sure the loan has the right collateral to back it.
Make sure your appraiser is licensed/qualified. Encourage your lender to look for appraisers with the MAI, SRPA or SRA designation and/or those who are members of the Appraisal Institute. Many of today’s financially pinched lenders are utilizing third-party firms to outsource administrative functions, which can result in the hiring of a low-cost appraiser that lacks the proper market knowledge. Make sure your appraiser has field experience in your market. According to the Appraisal Institute, a qualified appraiser knows how to conduct a thorough market analysis and make appropriate adjustments if/when distressed sales are used as comparables.
Follow your appraiser. While you may have heard that the appraisal needs to happen independently, the truth is that most appraisers welcome your presence and the detailed information you can provide about your home. Ask your lender for permission to do so, and confirm the appointment. This will also give you an opportunity to ensure that an adequate appraisal is performed. Make sure the appraiser spends a reasonable amount of time assessing the home and takes note of the details.
Get a copy of the appraisal report. According to the Appraisal Institute, federal law requires lenders provide consumers with the appraisal report, regardless of whether credit is granted, denied, or the application is withdrawn. A mortgage appraisal should not be used for any other purpose.
Know how to review the report. While a professional appraiser is needed to accurately interpret the report, there are some red flags you can keep an eye out for. Common errors in appraisals include: misuse of adjustments to comparables; disregarding special financing and concessions; or miscalculation of gross living area. Ask yourself how your home compares to other properties in your area to help determine if the appraiser’s review is accurate.
Appeal the appraisal. Most lenders have appraisal appeal procedures, known as “Reconsiderations of Value.” If you are aware of recent, comparable sales information or items that may not have been available or considered by the appraiser, provide those to your lender.
Ask for a second appraisal. If problems were found with the first appraisal, you can and should obtain a second appraisal. Once again, make sure a qualified appraiser is used the second time around.
File a complaint. If you have a legitimate beef, file a complaint with the appropriate state appraisal board or professional appraisal organizations. Lenders are required under federal law to report legitimate complaints with appropriate regulatory authorities.


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