An appraisal report determines the home’s value during the home loan process. We order the appraisal during the loan setup stage of the mortgage loan process. You must first sign and return the loan disclosures before we can place the order and start the home appraisal process.
You will receive an email from the Appraisal Management Company (AMC) requesting payment once we order the appraisal. Please pay that invoice you’re ready to proceed BUT don’t pay for your appraisal too soon. Before making the payment be certain the home inspection and seller negotiations have been completed. The AMC will not schedule the appraisal until the invoice has been paid.
Home Appraisal ProcessA home appraisal is conducted by a Licensed Residential Appraiser. The Appraiser is selected by an Appraisal Management Company (AMC). The appraisal costs typically range from $500 to $750 and the money is due before any work is performed by the Appraiser. Appraisals are about 95% science and 5% art. Appraisers follow guidelines when creating a report and those rules govern about 95% (my guestimate) of the home appraisal process. That leaves the 5% that is subjective. Appraisers have ethical standards and their work can be reviewed by their governing board, the TALCB. They do their very best to provide accurate assessments of homes. We share that so you know that the very vast majority of Appraisers are competent, hard-working folks trying to provide the most accurate and unbiased information.
Home Appraisal Process OverviewBelow is the outline for the home appraisal process.
- Return your signed loan disclosures.
- Get a home inspection – this is optional but we highly recommend it.
- We order the appraisal.
- You pay for the appraisal online via a link that is emailed to you by the AMC.
- Appraiser inspects the property and completes the report a few days later.
- We email you a copy of the appraisal report once it’s sent to us.
Appraisal Related Articles
Home Appraisal Process Details
The home appraisal process is coordinated by our operations staff. The compliance laws of the mortgage industry do not permit a Mortgage Loan Officer (i.e. me) to be involved in the home appraisal process.
You have three action items when ordering an appraisal. First, pay for the appraisal. Second, email us any off-market comps. Lastly, provide any insider information about comps.
Provide Information to Appraiser
Action is required by you if there are off-market comps or if there is “insider” information about a recent sale. In these instances, you would need to forward any pertinent information to us so we can forward it to the Appraiser (via the AMC). Check out how to avoid appraisal pitfalls for more details.
Appraisers have access to the Multiple Listing Service (MLS) and can view recent sales and current homes listed. What they don’t have access to is “hip pocket” sales and homes sold that were not listed in MLS. A copy of the sale’s Closing Disclosure will be required by the Appraiser in order to use it as a comp for the report.
Likewise, the Appraiser does not have “insider” information about recent sales. For example, you may know that the home across the street was sold at a steep discount because the homeowner lost his job and needed to move. That insider intel should be considered. The Appraiser can look for other comparable homes to use for the valuation and notate why that house isn’t indicative of the market.
How long does an appraisal take?
When getting ready for a home loan the appraisal inspection takes about one to two hours. Receipt of an appraisal report typically takes one to two weeks from start to finish (i.e. from the time the order is placed until the report is provided to the lender). This does fluctuate based on the housing market, the difficulty of the appraisal, and geographic location.
Appraisals can be completed quickly when the market is slow, the subject property is located in an urban or suburb area, and/or there are plenty of recent sales in the neighborhood. Conversely, appraisals can take weeks if the market is incredibly hot, the house is unique, and/or the property is located in a rural area with very few recently sold comps. Those types of qualities will prolong the home appraisal process as it may take the appraiser more time to complete the report.
How long is an appraisal good for?
Home appraisal reports are typically valid for 120 days for loans on existing homes. Appraisals for new construction are good for 180 days. This means that the mortgage home loan must close 120 (or 180) days once the appraisal is issued.
In the event an appraisal does expire a “recertification of value” can be requested. The issue is that there is a cost involved for a recert. The fee is dictated by age of the report and the market. The cost can be as little as $100 or as much as a brand new appraisal. The cost will be higher when more work is required. Older appraisal reports and significant market changes result in more work.
How does an appraiser get access to a home?
Like Realtors, Appraisers schedule their visits through the local Centralized Showing Service (CSS). For most purchases, the Appraiser utilizes CSS to gain access to the home. There are rare instances where a seller or Realtor require they be present for entry; this can result in an extended turn time of the home appraisal process if those parties are not accommodating to the Appraiser’s schedule.
For new construction the Appraiser will most likely reach out to the builder, or the Sales Associate of the builder, to gain access to the home.
For refinances, the Appraiser will contact the homeowner to schedule a time to inspect the property. Obvious a delay in scheduling results in a delay in the mortgage loan process.
A final inspection may be required if the appraisal is “subject to”. This means the Appraiser notated that the property’s value is “subject to” a few conditions.
The lender will order the final inspection once notification is provided (by the buyer, builder, or Realtor) that the house is fully constructed (or that all repairs have been completed). A final inspection typically costs around $15o to $175 and can take two to three business days to be completed.
When an appraisal report is “subject to” on an existing home the lender will determine if the repairs are necessary. In most instances, the repairs are necessary and are required to be completed before closing. There are, however, very common instances where a repair can be moved to after closing. It will ultimately depend on the program and the lender’s internal policies.
New construction home loan appraisals are typically “subject to” as the house may not be fully constructed at the time of the inspection. The Appraiser will revisit the property once it’s fully constructed and take updated pictures to document that everything has been completed based on assumptions made during the initial inspection.
It’s worth noting that we often can close and fund a loan to purchase new construction without the final inspection.
Money talks. There are occasions where a closing date is approaching quickly and a rush is needed on the appraisal turn times. An appraisal rush fee is basically a bribe to encourage Appraisers to escalate the order. Appraisal rush requests cost around $150 to $200.
Unfortunately, there are instances when the appraisal doesn’t arrive as quickly as promised even after paying the rush fee. In these instances, the rush fee is still paid. It’s a flawed system. Sorry.
What happens if the value comes in low?
Unfortunately, appraisals occasionally come in lower than the sales price and can create issues with mortgage financing. The “glass half full” approach is to realize that the appraisal may have prevented you from overpaying on a home without knowing it. Regardless, you should check out appraised value vs. sales price: plan for the worst so you know your options. Afterward, you’re welcome to fight the low appraisal if you believe there is merit to do so.
Obviously, the Mortgage Mark Team will be walking you through the entire home appraisal process – especially if a value comes in lower than expected.
What to do with the appraisal report
We will email you a copy of the appraisal upon receipt. There is no mandatory action required from you (assuming the value is acceptable).
Appraisals provide an estimated “replacement cost” to reconstruct the home should something happen to it. We recommend sending the appraisal to your homeowner insurance company to ensure they are providing accurate coverage amounts.
Loan Officer, NMLS # 729612