The mortgage crisis in 2008 had a massive impact not only on the lending industry, but on the appraisal industry as well. Appraisers were blamed for inflating home prices, and lenders were blamed for influencing appraisers. Although this wasn’t the sole reason for the mortgage crisis, it certainly contributed. And because of it, strict laws and oversight have been put in place in an attempt to prevent it from happening again. Consequently, an appraiser is going to be very cautious about appraising a home for much more than the purchase price; they are far more likely to provide a comparative value for a refinance.
In addition to the appraiser being carefully monitored, the loan officers have been essentially cut off from the appraiser. Instead, we have to go through the lender’s Appraisal Management Company (AMC) who then communicates directly with the appraiser. To put it simply, I am virtually blind to the appraisal process. Some AMCs are good about providing updates about scheduled inspections and due dates; others, not so much. I typically get the appraisal the same time as the borrower. I don’t even know when the actual appraisal takes place unless I’m notified by the AMC which almost never happens. Real estate agents will know before me because the appraiser often calls them to set up the inspection date. So to some degree it always kills me when an agent asks me for when the appraisal is scheduled because I was just going to ask them the same thing. I know this sounds crazy, but it’s true. I’m sitting on the sidelines twiddling my thumbs until it comes in. Now, if it is taking longer than it should, I can hit up the AMC for an update and they’ll in turn send a request to the appraiser for an update. It’s kind of silly, adds a middle man, and no doubt increases the cost of the appraisal, but I grudgingly understand why we are where we are. As a general rule, appraisals in the summertime are going to take longer than in the winter simply because appraisers are busier.
VA appraisals are ordered through the VA and they have 20 days to complete it. If the market doesn’t support 20 days because they are so busy (like Colorado Springs) you end up in a queue for your appraisal request to be accepted, and then the 20 days starts. To combat this in Colorado Springs, we have an excellent government lender whose AMC will put a rush on the appraisal for a nominal fee and we can get it back in a couple weeks. In places like Fort Knox, I get VA appraisals back in about a week sometimes. It really all depends on where in the country you live and what time of year it is. But a VA appraiser provides us zero visibility to their process–and then one day the appraisal shows up.
Government appraisals (FHA, VA, USDA) are infamous for coming back “subject to” completion of repairs because in addition to determining the value of the home, the appraiser must inspect the home following strict guidelines. Most of the time they want a hand rail put on steps or peeling paint needs to be repainted. Whenever this happens, the borrower has to pay for a completion report where the appraiser goes back out to the property to observe and take pictures of the completed repairs. This completion report normally runs around $175 and there’s nothing we can do about it. Without that completion report, the appraisal is incomplete and the loan can’t close. The appraisers aren’t being mean or messing with anyone, they are simply following a government inspection guideline. For more details, this is what they are looking for with FHA Loans during an appraisal: FHA Appraisal Inspection Checklist.