Appraisals

[Anonymous]

When it comes to appraisals I haven't seen a post specifically dealing with this perhaps, sub-topic. Do lenders inform the appraiser beforehand what value is already estimated for a refi or do they go in blind? My neighborhood is in the $500K range but, 2 weeks ago a similar house went for $650K, which seems CRAZY! Homes are definitely trending up but, not that UP!

[StartingOver10]

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@Anonymous wrote:

When it comes to appraisals I haven't seen a post specifically dealing with this perhaps, sub-topic. Do lenders inform the appraiser beforehand what value is already estimated for a refi or do they go in blind? My neighborhood is in the $500K range but, 2 weeks ago a similar house went for $650K, which seems CRAZY! Homes are definitely trending up but, not that UP!

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The lender is specifically not allowed to influence the appraiser about value in any way.  The appraiser is a independent third party hired to give the lender a valuation of the property. They are the lenders "eyes".  

There are different types of appraisals - refi's, purchases, estate valuation etc.  The lender will tell the appraiser the intent of the appraisal.  The appraisal is essentially a collateral valuation for the lender to help make a decision about your loan. Although you pay for the appraisal, the appraisal belongs to the lender and the appraiser can't even talk to you (or me or anyone else) about valuation at all. 

You can provide a list of improvements, if any, and your costs to make those improvements. You can provide data that you may have about the house - for example a survey or building plans (if applicable). You can not provide comparable sales or even discuss comps with the appraiser. They have direct access to comparable sales.  Not every sale in your neighborhood is a comp. Not every sale is as straight forward as it might appear on the public records (or even Zillow for that matter).  You could have ten appraisers evaluate your home and you are very likely to have 10 different values - hopefully in a very narrow range. 

On purchases the appraiser has a copy of the contract.  It does not mean the appraisal will come in at contract price, but the contract is there for the appraiser to evaluate it's terms and conditions as it relates to market value.

On a refi I don't think they get any indication of the "target value" at all, but I am not 100% sure of this. 

[Anonymous]

Thanks, very thorough and concise.

Interesting that our LO emphatically suggested we tell the appraiser of this recent comp. Fortunately, it just showed up on public records

[Anonymous]

We as lenders can't try to influence the appraiser but I always tell my borrower's to tell the appraiser what they are looking to do.  You can talk to the apprasier as much as you want while they are there.  I would definitely tell them about comps in your area especially if it is a refi and you need to get to a certain value to accomplish your goals.  I wouldn't annoy the appraiser though.  Just casually mention a few things and let them do their work.  On refi's they will know what the loan amount is going to be and will try their best to get that value if they have the data to support it. 

When the value comes in short the lender can protest it and try and get it up a little but it is really hard to do.  I have been successful only a couple of times in doing this and it usually only goes up a few thousand at most.  I have had appraisers come back and ask if I had different comps.  They sometimes miss a comp that would work and you just have to point it out to them.  This is all done through the third party that orders the appraisal.  I rarely talk to the appraiser directly except if it is a VA loan then the appraiser may contact me if they have a question.  Hope this helps.

[StartingOver10]

Mark, you might want to read appraisersforum.com to see how appraisers react to buyers, homeowners, Realtors, and loan officers when they talk about value/comps to the appraiser.  It is eye opening. 

[Anonymous]

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@Anonymous wrote:

We as lenders can't try to influence the appraiser but I always tell my borrower's to tell the appraiser what they are looking to do.  You can talk to the apprasier as much as you want while they are there.  I would definitely tell them about comps in your area especially if it is a refi and you need to get to a certain value to accomplish your goals.  I wouldn't annoy the appraiser though.  Just casually mention a few things and let them do their work.  On refi's they will know what the loan amount is going to be and will try their best to get that value if they have the data to support it. 

When the value comes in short the lender can protest it and try and get it up a little but it is really hard to do.  I have been successful only a couple of times in doing this and it usually only goes up a few thousand at most.  I have had appraisers come back and ask if I had different comps.  They sometimes miss a comp that would work and you just have to point it out to them.  This is all done through the third party that orders the appraisal.  I rarely talk to the appraiser directly except if it is a VA loan then the appraiser may contact me if they have a question.  Hope this helps.

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Many thanks for the insights. I'm not too concerned but, there are some lowball comps that had never been updated in the 60 years our area was developed. I told him a few details and it's obvious we've done extensive remodeling IF he's familiar with our area. Awaiting results any day now and expect a second appraisal from another lender shortly.

[Anonymous]

I will check it out.  I can imagine they hate it but that's the nature of the business.  I have realtors all the time tell me how to do my job but they don't understand the lending process.  In the end we are all trying to help our customers out as best we can and that's what we need to focus on.  StartingOver10 are you a realtor by chance because you have a great grasp on how the lending process works and that will make the LOs you work with very happy?

[StartingOver10]

Yes, been a Realtor for a very long time and I have lenders I work with closely...but I don't tell them how to do their business!  I know just enough about the programs to get the buyer to the right lender. 

Knowing about various loan programs I think is a benefit to the Realtor and the consumer because I have many clients that have purchased that "never" thought they could own a home. It is fulfilling to see them get their home

[Anonymous]

I completely agree.  It's great to see people get the house they never thought they could!  Where are you a realtor at?  If I ever have a client in your area who needs a realtor I would be happy to recommend them to you.   

[StartingOver10]

Thanks.  I will send you a pm