Like everything during the difficult times we’re living in, property appraisals have become one more task to accomplish safely. Not only is it difficult for appraisers to avoid a COVID infection and still do a correct appraisal, it is also difficult for them to establish an accurate property value.
Independent property appraisers work for mortgage lenders with the task of determining an accurate property value in order for lenders to proceed with a mortgage approval for a potential buyer.
Traditionally this is accomplished with an in-person visit to the home, a series of photos of the property and online research to find comparable properties in the area and what they sold for.
COVID has upended much of this system in spite of the fact that lenders still require a full appraisal before approving a mortgage. The appraisal industry, obviously concerned about their appraisers, has mandated protective gear in accordance with COVID protocols including masks and gloves before entering a property. Most of them would also like the house to be empty of owners and family members so as not to be required to interact with them.
In some cases, based on the estimated property value and loan amount, lenders will be satisfied with a desktop appraisal using online research of comparable properties with pictures. Since most real estate listings now have many pictures as well as virtual tours available, appraisers can get a really good look inside and outside the comparable properties and the appraisal property. Drive-by appraisals, used by lenders frequently for properties either already in foreclosure or getting ready for foreclosure, is another appraisal option, however, most lenders will not allow that method for an original mortgage loan.
The other issue appraisers are struggling with is the value of a property during a time when values are going up and inventory is very low. Since real estate sales are a lagging number, there could be properties in a pending status that would support an appreciating value, but appraisers cannot use them until the properties are actually closed. This coupled with the fact that there are fewer properties closing because of a lack of inventory is making the job of the appraiser more difficult than ever.
If you’re applying for an original mortgage and the appraisal comes in short, you do have a few options. First of all, you could come up with more down payment money, reducing the amount of the mortgage you’re applying for. If you can’t do that, remember that appraisers are never anxious to change their numbers, but if there was an obvious error that could have had a negative effect on the value you are certainly within your rights to point it out. Also, if additional information is available that was not considered by the appraiser you could attempt to get them to consider it. And as a last resort, there is a complaint hotline provided by the government if you feel that you have really been wronged, but that probably won’t help you get a mortgage approved.
Home appraisals have always been more of an art than a science – more so in our current situation. Appraisers are mandated to develop a report that is impartial, objective and represents an independent opinion of the value of the property. Everyone’s job in the real estate industry has become more difficult since March. All the players, realtors, appraisers, exterminators and contractors should be commended for their efforts in accomplishing a job that for the most part needs at least some in-person contact. Stay safe.
