Will I need an Appraisal?

Whether or not you will need an onsite appraisal on your home will depend on the type of loan you are looking for.  Your Loan Officer should tell you whether an appraisal will be required in your specific situation.  In general however, you will very likely need an appraisal on all first mortgage loans.  On second mortgage loans, the value still needs to be determined for your property.  However, an online "statistical" appraisal may be sufficient for your loan.  A statistical appraisal can save you the time and money involved in having an appraiser come out to your property.  A statistical appraisal is an online estimate based on recorded sales prices of comparable properties in the vicinity of your home.  Always discuss your appraisal options with your Loan Officer.  As your Loan Advisor I will inform you of your options and explain to you the costs and benefits of those options.

Can I use an Existing Appraisal?

You may be able to use an existing appraisal on some types of loans with certain loan programs.  Each lender will have their own guidelines for appraisals so consult your Loan Officer.    In general, most lenders will require that the appraisal not be older than 6 months.  In addition, they will require that their name is on the appraisal cover page.  The process to get an updated appraisal with a different lender's name "re-typed" on the appraisal seems like it should be straight forward.  However, this is a sticky issue because the policies of appraisers vary widely on how they handle "re-types" or "recertifications".   Some appraisers will not do re-types, meaning that you will have to order a new appraisal and pay the fee again.  Other appraisers will require that a written release to the appraisal is provided by the previous lender before the appraisal can be re-typed and used by another lender.   Most reputable lenders will provide the release, but it is not guaranteed and it does add time to the process.  And finally, most appraisers will require you to pay some type of fee for them to update the appraisal with a new lender name.  As your Loan Advisor, I will take a direct role in sorting this out for you.  I will speak directly to your appraiser, discuss their policies, then present to you the best options for your situation.

How is the Value Determined?

Many consumers are often frustrated because their perception is that the appraised value of their home is far less than what it is actually worth.  In many cases they are right!  However, please note that real estate appraisers must adhere to very specific rules and guidelines bestowed upon them by the lender as well as by state regulations.

In the case of determining value for the purpose of a finance transaction, appraisers must follow guidelines set by the lenders, which in many cases results in a slightly more conservative final value estimate.  Everything that an appraiser adjusts for [positive or negative] must be "bracketed" and supported by other comparable sales.  Here is an example:  If a home is purchased for $100,000.00 and the owners choose to add a pool at a cost of $30,000.00, the value of the home does not automatically increase to $130,000.00.  The appraiser must determine through a paired sales analysis what the market will support for a pool.  Only as an example, a home without the pool sold for $100,000.00 and a home with a pool sold for $115,000.00 therefore, the appraiser can only support a $15,000.00 adjustment.  This is the case with any features that an appraiser can adjust for, not just a swimming pool.  There is no set figure for any feature like a view, pool, spa, square footage, bathroom upgrades, etc.  The adjustments must always be bracketed to support the adjustment amounts.   A lender upon receiving the appraisal can reject the appraisal amount or cut the value at their discretion.  Thus appraisers are very careful about "pushing the value" on an appraisal.

As your Loan Advisor, I will always clearly communicate the needed values to your appraiser and work with them to get the highest acceptable value on your property.  I will also work with them to avoid wasting your time and money on appraisals that clearly won't give you the value needed to complete your loan.