Why are we waiting so long to order appraisals??

I have had five transactions thus far this year where this dynamic seems to be at play….
Loan Process
The diagrams above are not showing the new reality for all lenders — it is just a reflection of my experience with many lenders recently.

For whatever reason, (many) lenders (on many transactions) seem to be waiting to order an appraisal until they have completely finalized the approval of the borrower.

This is problematic for several reasons:

  • Sure, if a borrower can’t be approved the deal won’t close, but if the appraisal is not satisfactory, the deal also won’t close.  Why, then, must we wait so long to order the appraisal?
  • Sometimes the final approval of the borrower can drag on (and on and on) — which delays (and delays and delays) the ordering of and completion of the appraisal.

If you’re buying a house, make sure your lender orders your appraisal as soon as you have made loan application — especially since the fee that you pay at application is at least partially for the appraisal.

If you’re selling a house, don’t assume that the appraisal has been ordered as soon as the buyer makes loan application.  Follow up and make sure that the appraisal is ordered ASAP.

If any lenders can explain why this is happening, or provide any good reasons for it happening this way, I’m all ears.

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3 Responses to Why are we waiting so long to order appraisals??

  1. Joe Vita says:

    As an exclusive buyer agent I make sure that my clients request that the bank not order the appraisal until the home inspection is completed and that contingency is removed. Agents should make sure that the contract calls for the inspection as soon as possible once the agreement is ratified. There is no need to pay for an appraisal that isn’t needed in the event the home inspection which they usually have to pay for in advance doesn’t work out. My experience from the several deals I’ve worked out so far this year teaches me that an early appraisal is no guarantee of quicker loan approval. The banks know that the long list of federal requirements they must comply with together with a large work load that includes refinancing are the main reasons it takes so long today to have a loan approved. Appraisers aren’t very busy so that they cannot quickly jump on an assignment and get it done relatively soon no matter when it is ordered.

  2. Scott Rogers says:

    Joe — appraisers are quite backed up in my area and aren’t jumping on assignments quickly or getting them done quickly. I’m glad you’re having better results in your market!

    Scott

  3. Debbie Shickel says:

    A number of my clients are doing VHDA, RD, FHA or CHIP loans. While they go in and make loan application in a timely manner, the lender will hold off ordering the appraisal until the home inspection is worked out. Since many of these clients are limited in the amount of money they have to spend they don’t want to pay for an appraisal prior to getting the repairs worked out. The lenders usually are willing to wait for us to call before ordering the appraisal. If the deal falls apart due to the repairs not being worked out, the clients have not wasted or lost money for an appraisal that is not needed since they won’t be buying the home. Most of the first time buyers don’t have the extra money to spend on doing more than one appraisal if a deal does not work out. Also, remember that many of the appraisers are not just doing regular sale appraisals for home purchases and refinances but are also doing appraisals behind and prior to Realtor BPOs for the foreclosures that are out there. We should all be cognizant about this and allow more than enough time for loan approval and appraisal to give the lenders and appraisers enough time to do their jobs. If you are working with a client, why not just call the lender to find out how much time they need prior to writing the contract and how long appraisals in your area are taking and make sure your client has everything they need for the lender prior to loan application so that the whole process goes smoother for everyone? Let’s try to make the process from start to finish easier for our clients–both buyers and sellers–while we make it easier for ourselves, the lenders, appraisers and settlement agents or lawyers we have to deal with while selling homes.

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