Questions on Home Appraisals

Are Home Appraisals Public Record?

No. Home Appraisals are not shared with anyone except the buyer who paid for the report.  The only way anyone else could end up with access to the appraisal report is if was completed for an FHA loan AND the report was uploaded to the loan system.  In that case, the appraisal will stay with the property for six months.

Are Appraisal Part of Closing Costs?

Yes, the appraisal is part of the buyer’s closing costs.  It is usually a loan requirement, and most contracts require that the report be ordered within a week of the contract being signed by both parties.

Is an Appraisal the Same as an Inspection?

No.  Both the inspector and the appraisal is order the first week under contract and while they will both walk around the outside and inside of the house and take lot of pictures, that is where the similarity ends.

The appraiser is looking for the fair market value of the home and most appraisers will use the Uniform Residential Appraisal Report from Fannie Mae. The report requires the appraiser to describe the interior and exterior of the property, the neighborhood, and nearby sales of similar homes. The appraiser then provides an analysis and conclusions about the property's value. The appraiser might ask for an additional professional inspection if they see something that concerns them or to verify conditions of the loan were met.

The inspector is looking for things that will impact your wallet while owning the home.  They work for you (the appraiser is hired by the bank), and their goal is to give you a realistic view of the conditions of the home.

How Much Are Appraisal Fees?

In Tallahassee, appraisals are usually around $400-$600 depending on the size and location of the property and the type of loan. Some loans have more stringent requirements for the appraiser and those will cost the consumer more.  If the property is several acres, or in the middle of a family plantation, the report may take longer or cost more or both.

Can Appraisals Be Used by Multiple Lenders?

Yes, as long as the lender’s underwriter accepts the appraisal report it can be used.  Reports that are too old (as per the lender’s rules), do not follow the correct guidelines, or lenders overlays will need to be re-ordered.

Can a Home Appraisal be Challenged?

Yes, but they are rarely challenged successfully. The best chance a seller has to successfully challenge the value of an appraisal is if a comparable sale is missing.

Can an Appraisal be Too High?

No.  It is usually a good thing for the buyer for the report to come back high.  It is a sign that the seller left money on the table unfortunately for them.

Can an Appraisal be Reused?

Depends on the type of appraisal, the quality of the appraiser, the timeline, and the bank’s rules, but sometimes they can be reused.

Can a Home Appraisal Remove PMI?

Yes.  Once the loan to value drops below a certain ratio, the mortgage insurance can be dropped from your monthly payment.  Much of the time, the bank will ask for an appraiser to verify that value and if it is there, the loss of the mortgage insurance can save you several hundred a month on your mortgage payment.

When Can a Home Appraisal be Waived?

If you are paying for the home with cash, or you bring at least 20% to the closing, the home appraisal may be waived. We will still recommend ordering one (it is standard language on the contract) as an independent evaluation of your purchase.  About 20% of the conventional mortgages would qualify for an appraisal waiver, and sometimes when refinancing sellers will not be required to purchase a new appraisal.

How Long Does the Appraisal Process Take?

In Tallahassee it takes approximately two weeks from order to report.  During that time, the bank submits the appraisal order to the appraisal management company, and then they send the order to one of their contracted appraisers who will contact the listing agent to schedule a showing of the house.  Once the appraiser has visited the house and taken the measurements they need, they will return to their office to compile their report.  Depending on the time of the year, and the appraiser’s schedule it could take some time. We had one appraiser lose his father between the time it was order and the time the appraisal was due. Unfortunately, we were at the mercy of the appraiser and had to pushback closing several times.  After all that wait, the appraisal came back low even though it was a multiple bid situation, and we were not the highest bid.

What Do Home Appraisals Look For?

They are looking for anything that may impact the value of the home including:

  • Health and safety issues
  • Neighborhood characteristics
  • Quality of the construction of the home
  • Structural integrity
  • Updates and/or improvements
  • Condition of the house.

If the house has visible water damage, or non-working appliances it may be flagged in the report and depending on the financing requirements, that may keep the seller from the closing table.

What if the Appraisal is Lower Than Offer?

As a seller, a low appraisal, will likely mean you will have to lower your home’s price to get it sold.  There are some places in Florida where buyers will bring cash to the closing table to make up the difference, but Tallahassee is not one of those places.  The chances of a seller successfully finding an all-cash buyer who does not care that the appraisal came back low is unlikely to net a higher sales price. No one wants to overpay for a home.  Most of the time the contract language will allow a seller to terminate the contract and not sell.  In that case, the seller would not likely sell at all in the next six months, depending on how low the appraisal was compared to the list price.

What if the Appraisal Comes in High?

More than 92% of appraisals come in at or above offer price. If the appraisal comes back over offer price, we head to the closing table.  The buyer does not have to share the appraisal report with the seller, so the seller is unlikely to know how much the house appraised for and whether they left money on the table.

When Does an Appraisal Happen? When is it Ordered?

This is usually ordered the first week, per contract terms, but the appraisal may be put on hold while the inspection process is working out.  Most banks will wait until the buyer has approved the inspections and/or negotiated repairs before they tell the appraiser to complete their report.  If repairs are negotiated, depending on the repairs, the appraiser may take that value into consideration in his report.

Who Schedules the Appraisal?

The bank will order the appraisal from a management company.  When they receive the order, the appraiser will contact the list agent to arrange for access to the home. It will be scheduled the same way showings were handled when the home was on the market.

Who Attends a Home Appraisal?

Depends on the appraiser and the situation. Sometimes if the agents feel the numbers are close, or they hope to influence the outcome, they will meet the appraiser at the property to share comparable properties (this is especially important in outlying areas with few sales) and any other information that may impact the value of the home (multiple offers, negotiated repairs, etc.). Some appraisers are friendlier and easier to share information with than others.

Who Pays for the Appraisal?

The buyer pays for the appraisal as part of the loan requirements.

Who Does the Appraisal?

The only person qualified to complete a home appraisal is a licensed appraiser using standards set by their trade organization.  The appraisal report is intended to be an objective estimate of the value of the property. The licensed appraiser should have no connection to the buyer, seller or lender. The report will include the condition and location of the property, plus comparable sales, and market trends.

How Long is a Home Appraisal Valid For?

There is no set expiration date on an appraisal, and it depends on bank rules, but most appraisals are valid for somewhere between 60 and 180 days or approximately two to six months.