Both buyers and sellers alike experience stress during the home search and the home sale process. Many of them imagine they will be breathing a sigh of relief once the terms of the contract are agreed and they have signed on the dotted line. It may come as a shock, but that is not usually so and one of the things I hear most frequently from stressed-out home buyers and sellers is-Why is my appraisal taking so long?
Why Do Appraisals Take So Long? An appraisal consists of more than just the visit to a home. There’s a great deal of background research that takes place and this can take time. In addition, there is currently an extreme shortage of qualified appraisers which means the wait time for an appraisal to begin is becoming longer.
Why Do Appraisals Take So Long?
There are many reasons why your appraisal may be taking longer than you expect.
There Is A Shortage Of Appraisers
After the real estate market collapsed in 2007-2008 the government implemented multiple changes in an attempt to prevent the same thing happening again. One of these changes was to require that all appraisers be independent of both lenders and consumers.
In order to make this work Appraisal Management Companies were created. The lender contacts an AMC and orders an appraisal of a home. The AMC then offers the job to their slate of independent appraisers and one of them takes on the job. The appraiser delivers their report to the AMC who passes it onto the lender.
This process splits the fee that once went entirely to the appraiser, between the appraiser and the AMC. As a result, many appraisers experienced a significant cut to their income and so left the industry.
Add to this the fact that fewer people are entering the profession and more appraisers are retiring, and the number of available, qualified appraisers is in decline. Therefore the length of time you will wait for an appraisal is only likely to get longer.
There Is More To An Appraisal Than A Home Visit
The time an appraiser spends in a property is only a fraction of the total time they spend on the appraisal. In addition to a home visit an appraiser must:
- Research and visit other, comparable, properties in the area. This is done in order to establish if the sales price in the contract is similar to the prices of other, corresponding properties in the area. Photographs of the outside of comparables are often required as part of the appraisal report.
- Check the proper permits were obtained for any work done on the property and that any such work is up to code. This process may take several days if the appraiser has to wait for responses from the local government.
- The appraisal report consists of standard forms that must be completed, hand-drawn illustrations, photographs, written portions to explain the appraiser’s conclusions, copies of comparables and any other necessary documentation to support the final valuation. This can take many hours to write and compile.
- Submit the appraisal and provide any clarification, in writing, required by the lender. This happens because many lenders run what is known as an automated valuation model (AVM) on all of their files. This is intended to give a rough estimate of a properties value against which the lender can check if the appraiser’s valuation seems reasonable. However, these AVMs cannot take into account out of date comparables, unique properties, fluctuations in the market, etc. As a result, there is often plenty of to-and-fro until the lender is satisfied with the accuracy of the valuation.
Appraisers are legally liable for the information they include in their reports. Imagine a lender extends a $500,000 loan to a buyer, that buyer defaults and the home goes into foreclosure. It then turns out the home is actually only worth $300,00 and the lender is looking at a $200,000 loss. If the lender can prove the appraiser was at fault in their valuation of the home, the appraiser could be on the hook for that $200,000 difference.
Consequently, an appraiser is likely to take the time to ensure their appraised value is accurate not just because they want to do their job well but because they do not want to be held liable for a huge chunk of change.
You’re Not The Only One
At any one time, an appraiser may have several files on which they are working. Your appraisal is one of many they may be juggling and as such, at any given moment, your file may not be their top priority.
Your Property May Be Quirky
For cookie-cutter neighborhoods, it might not be hard to find comparable properties but the more different your home is from the average, the more difficult it is for an appraiser to find suitable “comps.” In this case, it may take longer to find homes that compare to yours or ways in which to formulate a value without enough comparable data.
Your Property May Be “Out Of The Way”
If you are waiting for an appraisal in a rural area you may have to wait much longer for your appraisal. In some areas of the country, appraisals outside of urban and suburban centers are taking up to four or five weeks, just to be started.
Appraisal Management Company Reviews
I’ve already touched on the fact that the introduction of AMC’s has added more steps and hence more time to the process, but there is more to it than that.
Appraisal management companies have their own checks and balances processes. Consequently, the appraiser may get their report into the AMC on, for instance, Monday, and that report could sit in a pile for review until Wednesday or Thursday. Once the report is allocated to a reviewer it has to actually be reviewed, approved and sent onto the lender. This process can take until the following week adding days to the appraisal timeline.
Lender Set Deadlines
The lender may be in no hurry to push the appraisal through quickly, especially if they have a backlog of work. It is not unusual for an appraiser to be given 14 days in which to submit the report.
Bad Time Management
It may be that your particular appraiser has bitten off more than they can check and as such is simply unable to meet their deadlines.
You Have A Bad Apple
Unfortunately, you may have a number of the reasons on this list contributing to why your appraisal is taking so long, but this may be compounded by the fact you are unlucky enough to have an unprofessional appraiser assigned to your purchase.
Can You Speed Up The Appraisal Process?
Many buyers and sellers look for ways in which to speed up the appraisal process.
It is illegal for a buyer or seller to influence or attempt to influence the work of an appraiser. As a consequence, it is not advisable for a homeowner or buyer to even try to provide information to an appraiser, even though they may be doing so in a genuine effort to be helpful. This includes identifying comparable homes, obtaining permitting information from the local government, or preparing background materials of any kind.
The exception to this is providing contact details for your Homeowners Association, a list of repairs or updates that have taken place in the last ten years, and your mortgage or site survey.
If you were to go ahead and give an appraiser a list of what you felt to be pertinent facts you would not only be liable for prosecution but it would do nothing to speed up the process.
While you cannot speed things up you can do one or two things to minimize any speed humps slowing the process even further:
- Price your home realistically, or if you are a buyer don’t offer way in excess of what the home is worth. When an offer price is significantly more than fair market value, the lender and appraiser will spend additional time going back and forth.
- Make your home available for the appraisal at any time the appraiser wishes. Turning down an appointment may result in your home dropping way down the priority list.
Since the government introduced new regulations to distance lenders and borrowers from the appraisal process, wait times for completed appraisals have been increasing each and every year. This situation is compounded by the fact that more real estate transactions are taking place than ever before and the number of licensed appraisers has been dropping steadily since the beginning of the decade. It is rarely the fault of the appraiser.
Helpful Information From Real Estate Professionals
Real estate appraisals are an integral part of the purchase and sale of property, particularly if the buyer is seeking funding from a lender. The appraisal value of a home can make or break a sale, so it only makes sense that so much weight is put upon it.
Finding a good loan officer can be as simple as getting referrals from friends or real estate agents. However, it really is important to do your research because even a good loan officer may not have access to the loan program that may be best for you.
Just because an appraisal came in below the offer price does not mean that the value the home appraised for is the final number. A low home appraisal whether used for buying a home or refinancing on a home mortgage can be appealed.
About The Author
Geoff Southworth is the creator of RealEstateInfoGuide.com, the site that helps new homeowners, investors, and homeowners-to-be successfully navigate the complex world of property ownership. Geoff is a real estate investor of 8 years has had experience as a manager of a debt-free, private real estate equity fund, as well as a Registered Nurse in Emergency Trauma and Cardiac Cath Lab Care. As a result, he has developed a unique “people first, business second” approach to real estate.
This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policy.