The Appraisal Nightmare: When Appraisers Don't Know the Guidelines.
The Appraisal Nightmare: When Appraisers Don't Know the Guidelines
As a loan officer, mortgage broker, or lender, you know that a smooth appraisal process is crucial for closing deals efficiently. But what happens when an appraiser throws a wrench in the works by demanding repairs or inspections for items clearly outside their scope of knowledge? This frustrating scenario is more common than you might think, and it can have serious consequences for your business and your clients.
The Problem with Overreaching Appraisers
Appraisers play a vital role in the mortgage process, but their expertise lies in determining a property's market value. They are not home inspectors or contractors. Yet, some appraisers overstep their boundaries by requiring repairs or further inspections for issues like minor cracks in the driveway, a loose doorknob, or even a dripping faucet. These nitpicky demands can create a cascade of problems:
Deals Fall Apart: Buyers may balk at unexpected repair costs, especially in a competitive market. Sellers can become frustrated and pull out of the deal altogether.
Time and Money Wasted: Unnecessary repairs and inspections cause delays, pushing back closing dates and potentially costing everyone involved money.
Damaged Reputation: Your clients rely on you for a smooth transaction. When an appraisal goes sideways due to an unqualified appraiser, it reflects poorly on you and your business.
Why Does This Happen?
Several factors contribute to this issue:
Lack of Clear Guidelines: While appraisal guidelines exist, they can be open to interpretation, leaving room for appraisers to exercise excessive caution.
Fear of Liability: Appraisers may be overly cautious to avoid potential lawsuits, even if it means exceeding their scope of work.
Inexperience: Some appraisers may simply lack the experience to differentiate between minor cosmetic issues and legitimate concerns.
What Can You Do?
While you can't control the actions of every appraiser, you can take steps to mitigate the risk:
Choose Appraisers Carefully: Work with reputable appraisers who have a proven track record of adhering to guidelines.
Educate Your Clients: Prepare your clients for the appraisal process so they know what to expect from an appraiser.
Challenge Unjustified Demands: If an appraiser makes demands outside their scope, don't be afraid to challenge their findings with supporting documentation and a clear explanation of the guidelines.
Build Relationships with Appraisers: Develop strong relationships with competent appraisers who understand your needs and prioritize a smooth closing process.
The Bottom Line:
Appraisers who overstep their boundaries create unnecessary hurdles in the mortgage process. By understanding the issue and taking proactive steps, you can protect your deals, your clients, and your reputation.