Intimidation, bribery and pressure on appraisers has contributed to over-valued homes and substantial financial losses for lenders and homeowners. Measures to curb contact between commission-based real estate professionals and appraisers have also discouraged any financially-interested parties from influencing appraisal results. The appraiser must maintain objectivity in his opinion of value if he talks to the homeowner to get additional details about the home.
Homeowners need an appraisal when they refinance or sell their home to financed buyers. A walk-through appraisal, in which the appraiser performs an interior and exterior inspection of the property, is the most common type. An appraiser may perform a drive-by appraisal for a streamline refinance or home equity line of credit. The streamline process involves less qualifying documentation than a traditional refinance. A seller must make his home available to an appraiser hired by the buyer's lender. Appraisals are intended to protect lenders' interests by ensuring that homes meet their minimum standards and are worth the amount they have been asked to finance.
An appraiser may contact the homeowner to set up an appointment and gain access to the home at a specific time. Unlike real estate agents, appraisers usually do not have automatic access to homes on the market. An appraisal walk-through may take several hours and may have to be conducted while the home is occupied, so the homeowner may be present during the appraisal inspection. An appraiser may ask the homeowner material facts about the home or neighborhood and the homeowners may volunteer information as well. It is up to the appraiser to use information gathered from the homeowner in a professional and accurate manner.
A homeowner can point out facts about his property that might not otherwise be apparent to the appraiser. For example, he may point out that the square footage, bedroom or bathroom count or other feature of the home differs from the public records. Such details can help eliminate confusion in the research process and avoid errors that might lead to appraisal inaccuracies. Appraisers are typically open to considering additional data; however, they must differentiate between influence and accepting legitimate information, Bankrate.com says.
A homeowner may appeal an appraisal with a low value or containing errors. To appeal a low value, the homeowner must provide legitimate comparable properties that the appraiser overlooked at the time of appraisal as well as an explanation as to why they should have been used. Ultimately, the appraised value is an opinion and any changes are up to the appraiser's discretion. Errors, such as facts about the contract r home's features, may also be disputed. The homeowner must present his appeal to the lender first, which contacts the appraiser to process the appeal.
- CBS San Francisco: ConsumerWatch: Homeowners With Low Appraisals Fight Back
- Bankrate.com: Homeowners Can Have A Say in Appraisals
- Bankrate.com: Real Estate Appraisal Rules Changing
- The Federal Reserve Board. “A Consumer’s Guide to Mortgage Refinancings,” Accessed March 11, 2020.
- Consumer Financial Protection Bureau. “What Is Mortgage Insurance and How Does It Work?” Accessed March 11, 2020.
- Rocket Mortgage. “Home Appraisal: What Is It, And What Does It Cost?” Accessed March 11, 2020.
- Benefits.gov. “Interest Rate Reduction Refinance Loan (IRRRL),” March 11, 2020.
- LendingTree. “The FHA Streamline Refinance Program Explained,” March 11, 2020.
- Cornell Law School. Legal Information Institute. “12 U.S. Code 3353. Appraisal Management Company Minimum Requirements,” March 11, 2020.
- FDIC. “FDIC Law, Regulations, Related Acts. Part 323-Appraisals,” Accessed March 11, 2020.
- The Appraisal Foundation. “What is USPAP?” Accessed March 11, 2020.
- Freddie Mac. “Enhanced Relief Refinance Mortgage,” March 11, 2020.
- Fannie Mae. “High LTV Refinance Option,” Accessed March 11, 2020.
Karina C. Hernandez is a real estate agent in San Diego. She has covered housing and personal finance topics for multiple internet channels over the past 10 years. Karina has a B.A. in English from UCLA and has written for eHow, sfGate, the nest, Quicken, TurboTax, RE/Max, Zacks and Opposing Views.