New Appraisal Regulations Could Hold Up Your Next Transaction…
The appraisal industry is undergoing some strict new changes, and it could end up costing buyers. The reason for the shakeup is due to concerns of influence by mortgage brokers and borrowers who select their appraiser. Therefore, the right to choose an appraiser has been taken away from the borrower, mortgage broker, and real estate agent. The lender has now been given the exclusive right to choose and must comply with a number of regulations to ensure the appraiser is both qualified and independent, as defined by the regulation.
In the recent legal bulletin announcing the change to federal regulations, there are a couple of changes to the process that may cause some confusion with buyers down the line.
- Since the lender is now responsible for ordering the appraisal, it is very likely that buyers will not know if financing can be approved until later than before. It’s very likely that the lender may have some delay in ordering the appraisal since it is now under their control. Buyers should now be asking about the timing of the appraisal when selecting thier lender. 24 to 48 hours after notice of mutual acceptance (or removal of inspection contingencies) is the standard Windermere Mortgage has adopted.
- Buyers may now be required to pay for more than one appraisal. Although a lender may use an appraisal ordered by another lender, many may be reluctant because it would be difficult to verify that it satisfies regulations.
Another note to make is that there will be fewer indpendent appraisers since the majority of them will now be on staff. This means they may not be as knowledgeable about the neighborhood and/or unique property characteristics. This change also means that borrowers, mortgage brokers, and agents can no longer suggest comparable properties or discuss possible misunderstandings.
It’s very likely that this could increase the amount of appraisals that come in below purchase price which will in turn drive more sellers to lower their prices to reach mutual acceptance.