FAQ

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How does the Appraisal process work?

When you ask a lender for a mortgage, they will want to ensure that the property is worth the price you are proposing to pay. The lender will need to ensure that, should you be unable to pay them back for any reason, that they will be able to resell the house and recoup their money. This is why an appraisal is carried out.

Mortgage providers, buyers, and sellers could all potentially benefit from influencing the assigned value of the property in question, and for this reason, the appraiser must, by law, be a neutral party.

The Federal Housing Administration, Fannie Mae, and Freddie Mac established regulations to prevent lenders from being affiliated with appraisers after the financial crisis of 2008. This happened because, so it was claimed, lenders sought inflated appraisals in order to lend more money, fuel price increases and bidding wars, and maximize profits.

When Will The Report Be Ready?

Lenders are required, by the Consumer Financial Protection Bureau, to tell borrowers they can have a copy of the appraiser’s report, as well as any other documentation the process generates. You must receive the report at least three full business days before the scheduled closing so that you have an opportunity to review and consider the report.

Asking for a report date from your appraiser ensures you know when the paperwork will be ready and reduces the possibility of the appraiser leaving the data languishing in a “to-do” pile until they get around to finishing the report.

How Does The Lender Get A Neutral Appraisal?

The lender will usually contact an appraisal management company, which you will sometimes see referred to as an AMC. These companies maintain rosters of qualified appraisers and when a request is received the AMC appoints a local appraisal professional to carry out the work. This minimizes the possibility of one party in the transaction having an appraiser selected who is sympathetic to their needs.

The appraiser will then arrange for a convenient time to visit the property and carry out their assignment. When they have completed the paperwork for the appraisal, the report will be sent directly to the lender.