Active Appraiser: March 30, 2014

QUICKREAD

Joshua Walitt is a Certified Residential Appraiser in Colorado, VA- and FHA- approved, and speaker to lending, real estate, and appraiser groups. He has been a Hearing Officer for the Mesa County Board of Equalization, and in 2013 served on Colorados AMC Rulemaking Task Force. He is a Candidate for Designation with the Appraisal Institute. Email questions to .(JavaScript must be enabled to view this email address) or reach him on twitter @joshwalitt.

By Special to the Sentinel Monday, March 31, 2014

My bank said they ordered an appraisal for my loan, but no one ever came inside the house. Does this sound right to you?

For certain types of loans, such as home equity loans, banks follow specific federal guidelines (called Interagency Guidelines) which allow for the bank to use an exterior-only appraisal from a licensed or certified appraiser in some cases. These types of exterior appraisals are typically used in low-risk lending situations, and can also used by banks for pre-foreclosure, loss-mitigation, and similar situations. Since the property is only observed from the street, the homeowner may not even know that the appraisers visit took place.

With exterior-only appraisals (sometimes referred to as drive-bys), assumptions are made about the interior, sides (if not visible from the street), and rear of the property, as well as the site in general, based on the limited viewing of the property, along with public records, any records in the local real estate MLS system, aerial imagery, or file information the appraiser has on the property, as long as the sources are determined to be reliable. For example, the appraiser may see that the visible parts of the property are in average condition displaying little-to-no needed repairs, so he could assume that the entire property is of similar condition. Or, based on the county records, the appraiser could assume the subject has a covered back patio, a fireplace, and a detached utility building, none of which is visible from the street. Keep in mind, these exterior-only appraisals are not typically ordered for first-mortgage loans, such as when you buy a house.

For first mortgages, a full appraisal is usually conducted, which includes the appraiser viewing the inside and outside of the property. In these situations, the inventory of the property is observed by the appraiser (rather than making assumptions, as in exterior reports). However, it is important to remember that the appraiser is not a home inspector, so he will still make certain assumptions. For example, the appraiser may assume the utilities are functional, the structure is sound, there are no health hazards, and so on, as long as there is no evidence to the contrary.

There are some situations where the bank can loan without the use of an appraisal. If there is ever any question, remember this: a borrower can ask to review copies of all valuation reports that the lender used.

I got my own appraisal a few months ago because I was thinking of listing my house for sale. Now I want to refinance, but my banker wont take that appraisal.

There are several factors at work here.

The rest is here:
Active Appraiser: March 30, 2014