In preparation for the upcoming conference Adlaw is sponsoring and I am speaking at, known as PacificWest , I have compiled the top 10 Questions we get asked by realtors either on the phone or on site while conducting the site visit. Here is goes!
1. Why is an appraisal required? Subjects already were removed.
Buyer’s can still get an appraisal after subject removal to help get mortgage financing. It just means that the results of the appraisal will not impact the transaction.
2. Why is a 2nd appraisal required?
If one lender does not move forward on the file after the appraisal is completed, the borrower may need to consult another lender. The new lender may have their own approved appraiser list and will request a new appraisal to be completed.
3. Do you need to look into the suite?
Most lenders require full access to the property, that includes any suites, garages or outbuildings. Any access issues may potentially result in re-inspection fees or appraisal delays.
4. Can you please come today please?
As appraisers, we must work strictly on behalf of our client. Which in most cases is a mortgage broker or lender. Before we accept an assignment we ensure that the report delivery will meet the needs for our client.
5. My buyer has great credit, why is an appraisal even necessary?
Each lender (there are 100’s) has their own way of managing risk. Often, an appraisal is the cheapest way for them to mitigate risk on a loan in case things go sideways. It also acts as a fire-wall for any potential illegitimate transactions and to protect the public in some cases.
6. Why would an appraisal differ from the sale price?
An appraisal completed for mortgage financing purposes must follow the lender’s appraisal guidelines. Often, the values we come up with are the same as the sale price. However, sometimes they do not. Here are some examples of when the appraised value might be lower than the actual sale price:
– The buyer paid a premium to be next to their relatives, or simply just overpaid due to a variety of factors (lack of knowledge, undue pressure, etc)
– The property has future development potential, and the lender wants any value attributed to future development excluded
– The property is located on 10 acres with a second dwelling, and the lender only wants the value of “Main House and 5 acres”
7. Can my buyer use the appraisal for tax purposes? Or separation? Or other?
No, they cannot. An appraisal is completed with one client and one purpose and cannot be used for any other purpose.
8. Can we have a copy of the appraisal?
No, the appraisal is a confidential document between the lender and the appraiser. The only case someone else will see it is if there is a mortgage broker involved.
9. How many appraisals do you do in a day?
Sometimes too many. Sometimes not enough ;)
10. How does a lender choose the appraiser?
Most lenders have an approved appraiser list. That way they can monitor the quality of the appraisals they are receiving. Some lenders now use an appraisal management company (AMC) to manage all appraisal orders. In these instances, the appraisals are completed by randomized appraisers at low fees, with less attention to quality and service. That is why it is important that your clients know which lender they are using for financing. If they are using a mortgage broker, often the broker can order the appraisal first and then shop it around for the best rate.
Thank you for your time,
Adam Lawrenson, BBA, P. App, AACI
Owner Adlaw Appraisals Ltd. www.adlawappraisals.com
October 2024