​If you're buying or refinancing a home you will in most cases need to have an appraisal on your home. As part of that process your lender will order a home appraisal, which gives you a trained professional’s point of view market value of the home to make sure the home’s value supports the purchase price or needed value to qualify for your refinance loan.

Who orders the appraisal? Your lender will order the appraisal to be performed by a licensed appraiser. Borrowers are typically required to pay for the appraisal, and the cost will appear on the Loan Estimate/Closing Disclosure as part of your closing costs.

What happens at the appraisal? For a home purchase, an on-site appraisal is needed for the mortgage to be approved. Appraisers consider:

• Comparable properties that have sold recently, similar in size and location to the home you are buying; their sale prices are usually the most important factor
• General condition and age of the home
• Location of the home, including views or other remarkable features
• Size and features (for example, the number of bedrooms and baths) of the home and property
• Major structural improvements such as additions and remodeled rooms
• Features and amenities such as swimming pools and wood flooring

What’s the difference between an appraisal and an inspection? An appraiser does not necessarily look for potential defects in the home. That’s a home inspector’s role. An inspector would be hired by you directly if you are purchasing a home and want an itemized report of potential repairs or problems with the home. On the other hand, the appraiser is hired by your lender to determine the home’s fair market value. This will allow your lender to ensure that the home loan amount is in line with what the home is really worth. 

We Have a Different Approach to Appraisals

We take a different approach to appraisals, most lenders will order an appraisal before getting a loan fully underwritten and approved, which can put you at risk for the cost of an appraisal before you know if the lender will approve your loan. These lenders do this to rush your loan through and tie you down to them so you will not entertain another lender.
We take a different approach, we always get your loan fully underwritten and approved, making certain there is doubt as to special circumstances or situations that may put you at risk for a decline such as income, challenged credit, payment history, or conditions pertaining to the home receiving a satisfactory appraisal. We get those items worked out, cleared up, and signed off first by an Underwriter, obtaining a full loan approval before ordering an appraisal. We want no surprises, and we do not want our client to put money up for an appraisal if the loan will not get approved. When we are ready to order the appraisal, it will be one of the final items remaining to be cleared before we have loan documents ready for you to sign.
This approach has put many of our clients minds at ease, allowing them to feel more secure in the loan process knowing their loan has been fully reviewed, underwritten and approved prior to paying for the cost of an appraisal.

Appraiser Independence Requirement

​​(12 CFR §1026.42)
As of October 15, 2010, the Home Valuation Code of Conduct (HVCC) has been replaced by Appraiser Independence Requirements. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires that a creditor or any third party specifically authorized by the creditor (including, but not limited to, appraisal companies, appraisal management companies and correspondent lenders) must select, retain and provide for payment of all compensation to the appraiser, and cannot accept any appraisal report completed by an appraiser selected, retained or compensated in any manner by any other third party, including a mortgage broker, real estate agent, real estate broker, or any party acting on behalf of a mortgage broker, real estate agent or real estate broker.
No member of a creditor’s loan production staff, person compensated on a commission basis upon the successful consummation of a loan, or person who reports to any officer of the creditor not independent of the loan production staff and process can:
·         select, retain, recommend, or influence the selection of an appraiser for a particular appraisal or for inclusion in a group of appraisers that is either approved to perform, or prevented from performing, appraisals for the creditor; 
·         have any substantive communications with an appraiser, appraisal company or appraisal management company that relate to or have an impact on the appraised value; or
·         order or manage an appraisal assignment.
No person may, in connection with an appraisal, do or attempt to do any of the following:

• Compensate, coerce, extort, collude, instruct, induce, bribe or intimidate a person, appraiser, appraisal management company, firm or other entity conducting or involved in the appraisal in order to cause the appraised value to be based on any factor other than the appraiser’s independent judgment and the facts upon which, in the appraiser’s independent judgment, are relevant to the appraisal
• Mischaracterize, or suborn any mischaracterization of, the appraised value of the property
• Seek to influence an appraiser or otherwise to encourage a targeted value to facilitate making or pricing the transaction
• Withhold or threaten to withhold timely payment, or any portion of a payment, for either an appraisal report or appraisal services when the report or services are provided in accordance with a contract between the parties

These requirements do not prohibit a mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, consumer, or any other person with an interest in a real estate transaction from asking an appraiser to:

• consider additional appropriate property information, including the consideration of additional comparable properties to make or support an appraisal; 
• provide further detail, substantiation or explanation for the appraiser’s value conclusion; or
• correct errors in the appraisal report.

Regulation B and Regulation Z require the lender to provide a borrower with a copy of the appraisal report promptly upon completion of the appraisal, or no later than three business days prior to closing, whichever is earlier. The borrower may waive the timing requirement in writing at least three business days prior to consummation of the loan. (12 CFR §1002.14, §1026.35(c))