You go to get a loan. You get your documents together, sign the application, make sure the rate is good. Things are cruising along. And then…days go by. You hear nothing. And when you call your LO, he says “we’re waiting for your appraisal.” What? Why? Shouldn’t it be easier than this?
There are two things you 
ought to know. First, this is a terribly difficult market. It’s very tough for appraisers to find comparable sales in markets that are slow, and as you might have heard, this is one slow market. I had one appraisal come back the other day for which there were no recent sales at all in that zip code. None. How does an appraiser establish the value of a home for which there is no verifiable market? Appraisers are having huge difficulty finding the comparable sales necessary to complete their appraisals, and this is making the process take a lot longer than normal.
The second thing is that the regulatory environment is causing enormous delays. It seems like every day we have new forms to fill out, new agencies to deal with, and new hoops to jump through. Recently all FHA loans began requiring a set of new forms for appraisers to fill out. Those forms take another couple of hours per appraisal. Almost simultaneously, Fannie Mae and Freddie Mac instituted the Home Valuation Code of Conduct (HVCC), which added another layer of bureaucracy to the appraisal process, and in many cases both increased appraisal cost and slowed down processing time (for a deeper look at HVCC and how to fix it, see this article).
Both of the above are combining to make the job of establishing the value of a home much more difficult. It’s made the ordering of appraisals harder, made the construction of an appraisal take longer, and establishing a value (which is the whole point of the appraisal) more time-consuming than it once was. That’s why it’s taking so long.
This probably doesn’t help you feel any better, but you’re certainly not alone. It’s a tough market, and everything from appraisals to underwriting has slowed down considerably, for almost everyone. Tell your LO to keep you updated, even if he doesn’t have anything to report, and just hang on. You can make it.
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Comments
6 Comments so far
SAM
The lack of comparable sales is a legitimate point. However, given said lack of sales and their accompanying appraisals, the added paperwork and regulation shouldn’t impact how quickly appraisals are being conducted.
Sheryl M
It is about time that appraisels are under pressure to be valued at a true more accurate value. They had become way over valued when compared to what it cost per square foot for new construction. How can an exisiting home 10-20 years old be worth more than a new one that does not need updating of any sorts? In my opinion, appraisels are still way to high and sellers need to get realistic about their asking price. Something is wrong with the picture when you can have a new home built for under $100 per foot, which includes the 5,000 sq ft lot, and sellers of exisiting homes are asking $250+ per sq foot! The last time this occured was back in the late 1990’s in that last 7 year real estate down turn.
I think appraisels should also take into account the anticipated future -20% drop in market values of homes that will occur over the next 12 months. The value of homes will not hit bottom until they roll back to the 1999 prices, which is where inflation adjusted wages are currently at. Especially now that lenders are not using 60% monthly gross income to qualify buyers, but instead traditional 30% max. Look at the stock market, a leading indicator, rolled back to 1999 levels.
It is critical for apraisels to come in more conservative than in the past to better represent the true value in a down market. The $200 or more spent to get a better estimate of that true value is by far the best spent dollars in the whole transaction next to the title insurance.
The points, fees, etc. should also be set to a per loan amount (flat rate fee) and not based on the amount of loan. The smaller transactions take as much time if not more than the larger ones.
Sheryl MM
Vince
Sheryl, Are you retarded?
Kim D.
Been waiting on an appraisal for almost 3 weeks now! We were supposed to close on 9/30. We have had to sign amendment for contract because we are STILL waiting on the appraisal! This is absolutely ludicrous! Fortunately, for us, we don’t have to be out of where we are until we settle, but what about those who do have to be out by a certain date! I wake up every morning with a sick feeling in my stomach wondering if we will hear anything today. The mortgage co. can’t contact them and no one will tell me who did the appraisal because I would call in a hot second! Is this normal right now and how long can this possibly go on! Thanks!!
Kim D.
Also…can I or someone else contact the appraisal co to find out what the hell is going on, and when this might be done so we can get this deal done. One thing I didn’t say is that we are buying a forclosure and the loan is held by Freddie Mac! I wonder if that is the problem!!!
Cheryldine
I know am about to lose my once in a lifetime opportunity to become a home owner because of this “appraisal” red tape. I agree with you Kim. I have been staying with people for going on three months now. I do not know what to do or where to turn to next. I asked if I could hire my own appraiser but was told since The US attorney General enacted a Appraisal independence act on 10/1 I can’t do that. I wish someone would have told me this before 10/1. I hope I get somewhere soon or I will end up in a psych ward!