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Real Estate Review Appraisals

The dreaded two words home buyers hate to hear from a lender: “Review Appraisal”.

What this means is that the lender wants their own real estate appraiser to give a second opinion as far as the worth of the collateral (the home being purchased).

I am in the process of purchasing a beautiful home. Part of the process entalils a loan and as a condition of the loan an appraisal is furnished by the borrower (me).

My appraiser did a normal home appraisal. Not expecting any problems.

But those dreaded words came from my lender. “We’ve ordered a review appraisal”. Some lenders have the audacity to have the prospective borrower pay for this additional expense. In my case, the lender (First Franklin) is notorious for ordering reviews,  but they cover the cost.

In some cases, it’s cause for concern. The reason that “reviews” can be unnerving is that sometimes borrowers are attempting to arrange a mortgage for the full amount of value of a property. What if lets say a property is appraised for $100,000 and the homeowners are attempting to borrow $115,000. There may be some problems especially if a loan officer is too eager and starts to make unrealistic promises.

Loan officers are notorious for asking their appraisers to “push” or “stretch” real estate values.  Pushing or stretching property values is bad business. The reason why is that it creates situations where the lender must have a second informed opinion, thus…the review appraisal.

I have found that “pushing” value is a losing game. My appraiser is a hard worker. He spent hours making sure he had found the best comparable properties within the closest proximity to the property which I am purchasing. This process is required in order to determine a value which is substaniated by previous comparable sales.

Herein lies the reasoning behind working with dedicated professionals. What sets quality appraisers apart from average ones is the time they are willing to spend in determining value. Greedy appraisers only want to do fast work and get paid.

Dedicated professional appraisers take time to make a solid effort to find comparable sale properties which will withstand underwriting scrutiny and bring a true high market value.

Most quality loan officers have the best qualified and most professional appraisers working with them.

Doing business with professional loan officers and appraisers will pay a dividend. What clients receive are the best program offerings combined with top notch appraisals.

Update:  Hooray! My review appraisal came in and it supports the value which we were looking for.

By Jim Jump To Comments
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1 Responses to "Real Estate Review Appraisals"

    Toronto says:

    Appraisal data lags the market. Appraisers rely on detailed market data, which often takes months to compile. In a rapidly falling market, rents as reported from traditional sources therefore will be substantially below real-world conditions. The simple remedy is to visit similar properties and inquire about rental terms. If you are visiting a loan prospect and the building across the street has vacancies, just stop by.Comparable sales occur with less frequency. In the early stages of a downturn, sellers tend to hold to historical price expectations and the volume of property sales therefore drops dramatically. This phenomenon, in turn, leads to stale comparables, which reflect historical but not current market rents. Challenge your appraisers to produce recent sales data to support their valuation assumptions. If such support is not available, require appraisal modifications or take other appropriate defensive steps such as lowering advance rates.Landlord concessions may not always be visible. To attract tenants under weakening market conditions, property owners offer a variety of concessions such as free-rent periods, funding of unusual improvements sought by tenants, and/or absorption of extraordinary expenses. The sums involved may be quite significant and should be factored into any calculation of net effective rent.


    Posted on 01/17 at 2:22 AM

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