And the appraised value is...?

The first question I receive from agents and borrowers alike when learning that our company has received the appraisal report is….........wait for it…....… “What’s it worth?”

You may be surprised to learn that there is more to the appraisal report than just the appraiser’s opinion of value. When my processor receives the report she sends it to the customer and me with a note stating that the report will be sent to the underwriter for review. The underwriter has the job of determining the risk of the loan application which includes analyzing the collateral securing the loan. Value is only one component of overall report. One of the largest private mortgage insurance companies in the U.S., PMI Mortgage Insurance Co. lists these other factors to review during the approval process.

Subject Property:
1. Does the appraiser appropriately and completely describe the subject property’s features, amenities, quality of interior and exterior finishes, fixtures and materials?
2. Does the appraiser accurately report the subject property’s neighborhood value trends (increasing, stable or declining)? If the subject property is in a distressed market, the appraiser should use comparables that are not older than 3 months and provide a current listing.
3. Is there support for the subject property’s effective age?
4. Does the appraiser report and analyze the subject property’s current and prior listings and sales activity?
5. Does the appraiser disclose and analyze negative features and/or characteristics of the subject property?

Comparables:
6. Does the appraiser consistently support the adjustments assigned to the comparables?
7. Are the subject and comparables consistent with the neighborhood boundaries as shown on the location map?
8. Are the comparables similar to the subject property in relation to style, sales price and square footage, and explained if not?
9. Does the appraiser use non-MLS or non-verifiable comparables, and if so, do they explain why?
10. Does the appraiser report, analyze and appropriately adjust for seller concessions?

When an appraiser believes that a property's sales price is supported by the value, you are only half way home. The underwriter has to believe it too.