Zillow Advice: Buying Process - For an FHA loan, must I use the appraiser hired by the lender?

With FHA, we still can pick ...

Thu, 02 Jul 2009 14:41:00 GMT

With FHA, we still can pick the appraiser. I have a few great ones in your area. At my website, I have created a subscription page for my email series entitled "First Time Homebuyers Workshop" This series includes video designed to help first time home-buyers answer questions well in advance. I also have another series entitled "The mortgage process" which details what to expect once the loan has made it to the bank. Visit me at http://www.prestonware.com or http://prestonware.blogspot.com/

I'm a noob, but I am confused. ...

Thu, 02 Jul 2009 04:39:00 GMT

I'm a noob, but I am confused. Help me out. Your appraisal came back too low. Therefore the bank will only lend x amount. Seller won't accept x amount? I would say to keep looking. Either that or you would need to pay a premium. It wouldn't surprise me to see the flood of buyer activity begin to boost prices in this market.

On May 1, 2009 the ...

Wed, 24 Jun 2009 21:01:00 GMT

On May 1, 2009 the new

"Home Value Code of Conduct" (HVCC, aka "The Code")
went into effect.

It applies to all states, and to almost all mortgages that will be purchased by Fannie Mae or Freddie Mac:

Freddie Mac's Page:

Home Valuation Code of Conduct

--------------------------------
Further reading:

From the May 2009 edition of Realtor Magazine (National Association of Realtors):

Ethical Appraisers are needed at a time when Banks are pushing for Lower Reported Values

Orange County (CA) Register recently ran this Blog on the HVCC:

New Appraisal Law Starts Today
-----------------------------------
Best wishes to you,
Fred

Yes, and you are going to ...

Wed, 24 Jun 2009 21:01:00 GMT

Yes, and you are going to get f ' ed over. Especially now with the new rules that interpose a mediating agency. Soon appraisals that were $350 will be $900.

I'm just concerned because ...

Wed, 24 Jun 2009 20:30:00 GMT

I'm just concerned because I've had 3 other fee appraisals pull comps for this home and they can't see how he justified using the ones he did. They chose homes that have sold more recently and have more in common with the subject home than any that the appraiser chose.
I want to be sure that there's nothing underhanded going on that I'm unknowingly a party to.

The appraiser must be FHA ...

Wed, 24 Jun 2009 19:56:00 GMT

The appraiser must be FHA approved and approved by the particular lender you are using, the appraiser usually uses comps that sold in last 12 months and that are with in 1 mile of the property, if they did not use most recent sales there is a reason for it, were they bank owned ? also an appraisal for a purchase is the purchase price even if the property is worth more than the purchase price.

if you have a problem with ...

Wed, 24 Jun 2009 19:55:00 GMT

if you have a problem with the appraisal you can either 1) ask the lender to get a different one, or 2) appeal to that one(although usually you dont want to wait untill the appraisal has been submitted.)

with 1 another bank/leander approved appraiser will do a follow up appraisal at your expense, however because of the risk of fraud, the bank will not an appraisal that doesn't meet bank criteria(which usually involves the bank hiring them.

with the second choice you get an appraisal or a realtor to bring comps to the attention of the bank's original appraiser and discuss with him the value that he has/will assign to the property.

my recommendation is to ask a Realtor to get you some strong comparable sales from the last 3 months that suggest the price you are looking for. have these ready to present to the follow up appraiser and make that presentation before he submits his follow up to the bank. you will note that it is in the bank's interest to value properties conservatively to mitigate risk of loss

even so, the original appraiser probably knows more than you do about accurately pulling comps, he does, after all do this for a living. odds are that if the second one comes in close, he will defer to the first, and stay conservative. if there is a strong case, you may have a shot

you might consider too a new lender, new appraisal. it wont be colored because the banks dont share this info.

Being that we are towards ...

Wed, 24 Jun 2009 19:42:00 GMT

Being that we are towards the end of June, sales transactions from 1/1/09 will not be used over sales transactions closed in May 2009. I am no appraiser, but distance and how long ago the purchase closed both play factors into this.

So you're stating that the ...

Wed, 24 Jun 2009 19:29:00 GMT

So you're stating that the bank's appraiser is undervaluing your property via this appraisal?

One reason the bank and/or appraiser may be using one in the neighborhood and two outside, is to show the market area for your property. Many past appraisals were OVER valued because they only focused on one neighborhood ONLY.

You can request a review appraisal. But you cannot ask for a particular appraiser. They would have an internal (bank employed appraiser) or a new "pooled" appraiser (randomly assigned) do a followup appraisal. Sometimes called a "drive by".

Some follow-up info:Since ...

Wed, 24 Jun 2009 19:24:00 GMT

Some follow-up info:
Since 1/1/08, there have been 3 arms-length sales within the same section and phase of the same subdivision of this house. These homes are nearly identical to the house in question. There have been 8 within the same subdivision in that time period, 3 since 1/1/09. There are similar neighborhoods nearby, as well, with a total of 19 comps since 1/1/09 within 1 mile. The appraiser chose 1 of these sales. Others included a home 2.5 miles away, with 1 less bedroom, 1 less bath, no basement (this one has a finished basement), no garage, vinyl (this one's brick).