Things You Should Know About Appraisals
Many homeowners tend to only have their home appraised when they are refinancing or decide to list the home for sale. If this sounds familiar you should be prepared because the appraisal process has undergone some changes in the last couple of years. To help you be better prepared when you have your home appraised we are going to share with you three key things you should be aware of before you begin the appraisal process.
One of the first things that you should be aware of is that the relationship between lenders and appraisers is a thing of the past. Lenders and appraisers no longer work together; in years past it wasn’t uncommon for your lender to have a relationship with certain appraisers. This resulted in home values either appraiser higher or lower depending on how the lender wanted it to go. When the Home Valuation Code of Conduct went into effect on May 1, 2009; it changed how lenders chose their appraisers. Appraisers were no longer chosen because of personal relationships but lenders must now choose an appraiser through appropriate channels. This ensures that homes are valued fairly and there is no deception on the part of the lender or the appraiser.
The next change to take place is the quality of the appraisal you will be receiving. Since the appraisal field was taken over by appraisal management companies the quality of appraisals being done has suffered. Not only are appraisers making less per appraisal today than they had in years past, but they are expected to perform these appraisals under unrealistic time frames. Because of this, appraisals are suffering. The quality and level of experience of many appraisers working today is not what homeowners have come to expect. What this means to you is that the appraisal you receive may have been done hurriedly and you may not receive the value that you assumed you would get. If you are unhappy with an appraisal you can always request another one, but you may have to pay for it out of your own pocket.
The final thing that you should be aware of is that the amount of cancelled contracts has risen considerably. Experts believe that the high amount of cancellations can be attributed to low appraisals. But that is not the only reason why a contract can be cancelled, many cancellations are due to problems that may have been discovered during an inspection, or the buyer may have recently experienced a change in income. It is also common for a seller to cancel a contract if they feel that their home didn’t appraise well. Whether you’re a buyer or a seller, contract cancellations is something that you should be prepared for. Â
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