If you’ve read our fun Homeowner’s Pursuit informational piece, you can see that getting an appraisal is smack-dab in the middle of the mortgage process – step number 8 of 16, in fact. But in today’s unusual real estate environment, that appraisal is a critical step you want to ensure goes as smoothly – and quickly – as possible for your home purchase.
Today, many real estate markets are hot, hot, hot… and the result is that accurate, timely appraisals are a key to a successful transaction, more than ever. Tighter regulations and licensing requirements for appraisers (like the need to have a four-year degree and 2,500 hours of experience to be a certified appraiser) have resulted in some markets having a relative shortage of appraisers, potentially slowing down the closing process for home buyers and sellers because of “supply and demand” obstacles.
With lenders scrutinizing appraisals more than ever, it’s imperative that sellers and buyers have an accurate, thorough and timely report from a qualified appraiser.
You can help that happen – here are four ways:
- Insist on an AMC that utilizes high-level, certified appraisers familiar with the market – The move by most lenders toward using Appraisal Management Companies (AMCs) makes it much easier to access a larger, more qualified group of appraisers, who are managed from start to finish of the process to ensure Appraiser Independence Requirements (AIR) compliance in all areas. When working with a mortgage lender, make sure they’re using an experienced AMC that is very familiar with your market and AIR.
- Do some homework (and preparation) – You don’t want to run the risk of the appraisal coming in artificially low. One way to manage this is to order an appraisal when you see sales of similar homes closing near yours, because an appraisal value is based on the best “comparable” sales nearby. In hot markets, appraisal values can lag behind current values. You can research comparable sales (comps) to make sure the appraiser has the most current information. Appraisers often only have access to Multiple Listing Service (MLS) transactions, so info on nearby For Sale By Owner (FSBO) or other off-the-MLS sales can help establish better comps for your area. But the biggest key is to have your house ready and looking the best it can at the time of the inspection.
- Help facilitate the appraisal – Quality appraisers are in high demand, which can slow the process down. If you’re a seller, there are things you can do to help. One is to be present at the appraisal to answer any questions about your property, or even have a list of improvements/renovations ready. Another is to have any previous appraisals available, to verify square footage and other details. But always remember that you can never influence appraisal value by recommending a final value; that is an AIR violation and will result in the appraisal process starting over again from the beginning – slowing you down and causing you to pay for another appraisal.
- Review the appraisal carefully – By law, buyers and sellers receive a copy of each appraisal. If you see any information you think is wrong or suspect, you can point it out. This includes comps that are not truly comparable – outside the neighborhood, too old to be relevant, etc.
In the end, a great way to make sure an appraisal is just one normal step in your successful home purchase is to work with a trusted mortgage advisor who truly understands the process. And Alpine Mortgage Planning has implemented an innovative incentive program that provides financial bonuses to appraisers to work quickly, so your home purchase process isn’t slowed down. Make an appointment with a mortgage advisor today for details!