{"id":4753,"date":"2016-10-03T13:17:12","date_gmt":"2016-10-03T13:17:12","guid":{"rendered":"http:\/\/teammovemortgage.com\/?p=4753"},"modified":"2020-07-13T22:35:25","modified_gmt":"2020-07-13T22:35:25","slug":"appraisal-issues-explained","status":"publish","type":"post","link":"https:\/\/teammovemortgage.com\/blog\/appraisal-issues-explained\/","title":{"rendered":"Appraisal Issues – Learn the Reasons Plus Tips to Protect Yourself"},"content":{"rendered":"

Appraisal Issues are Causing Major Delays!<\/h2>\n

We will be the first to say that appraisers have a tough job.\u00a0\u00a0Appraisers are\u00a0questioned constantly.\u00a0\u00a0When\u00a0values come in low, it is the appraiser’s fault.\u00a0\u00a0Plus their job continues to grow tougher.\u00a0 But, no one can dispute that the real estate industry has a real problem.\u00a0 That problem is the bottleneck of the appraisal process.\u00a0 So let’s discuss the reasons\u00a0for\u00a0appraisal issues lately.\u00a0 Additionally, we provide ways to avoid many of the problems.<\/p>\n

There’s Not Enough Appraisers!<\/h2>\n
\"Appraisal
OK, appraisers aren’t 100, but they are aging!<\/figcaption><\/figure>\n

Research by the Appraisal Institute finds the number of appraisers has declined 22% since 2007.\u00a0 Additionally,\u00a060% are over 50 years old<\/span>.\u00a0 So obviously, the number of appraisers is dwindling and there are several factors.\u00a0 First of all, anyone that wants to enter the appraisal field has huge barriers to overcome.\u00a0 In NC, a certified residential appraiser needs a bachelor’s degree, 200 hours of appraisal education, 2500 hours of appraisal work, and at least 2 years of experience.\u00a0 Sound like masters or doctorate degree?\u00a0 Sure does to me!\u00a0 Just think, a general contractor that actually builds a house doesn’t need anything near this.\u00a0 So to become an appraiser, a trainee needs a supervisory appraiser to hire him\/her.\u00a0 Therefore an appraiser hires a trainee that will often be the competition in 2 – 3 years.\u00a0 Because of these barriers of entry, the appraiser demographic is getting older.\u00a0 So these appraisers will eventually retire or at least want to lessen their load.\u00a0 More problems for real estate market!<\/p>\n

Appraisal Management Companies Control the Market<\/h2>\n

Mortgage companies hire Appraisal Management Companies (AMC)\u00a0and they are\u00a0the middle man in the appraisal process.\u00a0 The AMC will shop the order to appraisers until one accepts the order.\u00a0\u00a0There are good and bad things with AMC’s.\u00a0 Foremost, they usually cover the entire US, follow a compliant process,\u00a0and often the fee is uniform.\u00a0 But the actual appraiser is paid\u00a0a lower than market fee.\u00a0 So for appraisers to make a living, they need to crank out a lot of low paying appraisals to these companies.\u00a0 Hence, there is at least the perception that these appraisers would grab the first 3 comps and get out of dodge.\u00a0\u00a0Again, we really think the world of appraisers and don’t mean to state an appraiser would do such.\u00a0 But there is at least the perception to many.\u00a0 Our company prefers to set up approved appraisers in each county though.\u00a0 We order appraisals in a compliant rotation system with local appraisers.\u00a0 Orders\u00a0only go to the AMC if\u00a0all approved appraisers reject the order.<\/p>\n

Regulations and Investor Requirements Increase Appraiser Work\"appraisal<\/h2>\n

The real estate market and more importantly homeowners, have experienced the financial meltdown, mass foreclosures, and depreciation.\u00a0 Well, appraisers really took it on the chin too.\u00a0 As lenders, PMI companies, and agencies took losses, they ratcheted up the appraiser requirements.\u00a0 Were some things done wrong on appraisals or done in a lax manner?\u00a0 Yes.\u00a0 But the amount of work going into appraisals has increased dramatically.\u00a0 Of course HVCC came into effect.\u00a0 This regulation created rules for the appraisal process.\u00a0 Additionally, extra forms and processes were added onto the appraiser’s workload.\u00a0 Basically some appraisers have said the changes have added hours to each appraisal.\u00a0 The $100,000 question is “are appraisals any better today than before the meltdown?”.<\/p>\n

VA Appraisal Issues<\/h2>\n

The Department of Veteran Affairs is currently overwhelmed\u00a0with the sheer volume of VA loans<\/span><\/a>.\u00a0 This is in addition to the other reasons mentioned in this article.\u00a0\u00a0Recently we\u00a0learned that VA is only assigning appraisal orders on Mondays.\u00a0 Therefore just the assignment to the appraisers is taking 1 – 2 weeks!\u00a0 Then you have to add the appraiser’s turnaround time to it!\u00a0\u00a0It is not hard to do the math here!\u00a0 30 day VA appraisals have become the norm in many VA concentrated areas such as Fort Bragg and Camp Lejeune.\u00a0 Solution:\u00a0 Use a longer closing date such as 45 days to account for the delayed appraisals.<\/p>\n

VA Appraisal Problems & Solutions:\u00a0<\/strong><\/p>\n

    \n
  1. Appraiser requires missing contract pages or addenda.\u00a0 Realtors can help by providing all documentation up-front.\u00a0 This includes fully executed contracts complete with all addenda, signatures, and other applicable items.<\/li>\n
  2. Assigning orders only on Mondays.\u00a0 For this reason, we do our best to submit all appraisal orders possible prior to Mondays.\u00a0\u00a0This is at least until\u00a0we hear VA changes their schedule.\u00a0 Otherwise, we order the appraisal through VA’s system as quickly as possible.\u00a0 So at least we are not the hold up.<\/li>\n<\/ol>\n

    Busy Real Estate Market Means Slow Turn Around<\/h2>\n
    \"appraisal
    Appraisal squeezing your closing?<\/figcaption><\/figure>\n

    So there’s not enough appraisers because they are old and every entry level person may as well be an attorney.\u00a0 Then AMC’s don’t pay appraisers enough so appraisers won’t accept the low ball pay orders.\u00a0\u00a0In some markets, appraisers are charging “rush fees” over and above\u00a0the normal\u00a0appraisal fee. \u00a0Additionally, regulation increases the appraisal report length.\u00a0 We have even heard of fees as high as $2600!\u00a0 Not very buyer friendly and especially first time buyers.\u00a0 Finally VA and the small segment of VA approved appraisers can’t keep up with the VA lending environment.\u00a0 This is a perfect storm!\u00a0 It is no wonder that we see appraisers rejecting orders and charging more money.<\/p>\n

    In conclusion, we do love our professional appraisers in our local markets.\u00a0 But if the market entry restrictions for appraisers doesn’t change, the current appraisers will either burn out or soon retire.<\/p>\n

    So What Can I do to Protect My Purchase From Appraisal Issues?<\/h2>\n

    Foremost, remember that\u00a0lenders cannot\u00a0pick the appraiser.\u00a0 But there are several things a Realtor, Buyer,\u00a0or Seller may do to avoid appraisal issues.\u00a0 \u00a0It all starts\u00a0with the\u00a0offer to purchase.\u00a0 Allow sufficient time\u00a0to close.\u00a0 If VA appraisals are taking 30 days alone, make\u00a0the closing date for 45 days.\u00a0 Also, check out our article “Appraisal requirements to prevent closing delays and extra costs<\/span><\/a>“.\u00a0 It includes easy to follow tips you can implement before the appraiser comes.<\/p>\n

    Check Out Other Informative Articles Explaining<\/p>\n