How Appraisal Timelines Affect Home Buyers
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You finally found the home you want to buy. Or perhaps you want to take advantage of the historically low interest rates and refinance your current home. You work with a Home Loan Specialist, lock in a rate, or make an offer and then…you wait. Why? Because the appraisal is taking longer than expected to go through.
With the real estate market being so competitive, appraisal timelines are changing. How will this affect you?
Appraisal: The estimate of a home's current value based on the current real estate market.
Appraiser: The licensed third party (no connection to the buyer, seller, or lender) professional who determines the home's value through an unbiased assessment of the property.
Appraisers consider every factor that could impact a home’s value. Looking at comparable properties in the area, the current condition of the home, improvements that have been made, as well as the size of the home and the amount of land the home sits on (also known as the home lot) can all affect the value of the appraisal.
With so many people buying and refinancing homes, appraisals are in high demand and appraisers are becoming backlogged. This is then causing a delay in closings until they can be completed. Let’s look at some of the reasons why:
- Many appraisers have been in the profession for a long time. This means they have earned the right to be particular in what jobs they choose to take on. While this is wonderful for them, it tends to make things a bit more difficult for lenders and home buyers trying to close on a home.
- Because many appraisers have been in business for so long, they’re reaching retirement age. Therefore, there are less available to appraise homes.
- The process to become a home appraiser is quite lengthy. Depending on the state someone is getting licensed in, they may have to train for two years (or longer) with a licensed appraiser before they’re certified to work on their own.
- Like all businesses, real estate and mortgage companies must adhere to certain rules and regulations put in place by the government. As things change and regulations evolve, so does the appraisal process.
- There was a time when mortgage lenders could work with their preferred appraiser. To protect both home buyers and sellers by keeping appraisals as unbiased as possible, a rule was put in place that appraisers needed to be from an independent third party. This is great for transparency, but it requires lenders to work with appraisal management teams that may take longer to get things done.
- Home Loan Specialists also work with underwriters whose job it is to verify all your information including income, credit, employment, etc. before approving your loan. They also verify that the appraisal value lines up with the price of your mortgage. If an underwriter decides they want more information from the appraiser, it will take longer for the appraisal to go through.
If you’re wondering what this means for you, don’t worry. Your appraisal will get done; it will just require a bit more patience! Whether you’re buying, selling, or refinancing, we understand how frustrating it can be to have to wait. Let’s talk about some things you can do to help ensure a smooth appraisal process:
Selling a Home:
- Gather any documents. If you have a list of any improvements or upgrades you have made, along with receipts to back them up, that can be helpful. You can also give them any documents that ensure the property size as well as one that lists the most recent sale pricing for your home.
- Let them know how old appliances are. This can go under the upgrade category, but it’s worth saying, nonetheless. For example, your appraiser may not know whether your water heater is a year old or a decade old. Let them know ahead of time to help move things along.
- Clean up. While it’s not necessary for your home to be perfectly tidy when an appraiser is there, it does make it easier if there’s no clutter.
- Remember, first impressions matter. Make sure the outside of your home is as decluttered as the inside.
- Make a pet plan. No matter how friendly your pet is, you don’t want the appraiser to be a distracted. Make sure they’re somewhere safe and not roaming to make things much easier for your appraiser.
Refinancing a Home:
Those looking to refinance their home should follow the same steps we mentioned for sellers. Here are some more helpful tips.
- Make small improvements. Any small improvements to the home will increase its value, which is essential in refinancing. Remember, the higher the value of the home, the more equity you will build!
- Check local comps. Look into other homes in your area to see what their current value is. Many times, you can access public records on what homes have sold for. Homes that have similar square footage, acreage, and layouts as yours can give you a great idea as to what your home’s value may be.
Buying a Home:
As a buyer, you don’t have as much to do regarding appraisals. The best thing you can do is talk with your Realtor regarding how much similar homes in the area are going for and making sure you have a plan ready if the appraisal comes back as less than you were hoping for.
You may be wondering what else you may be able to do instead of a standard appraisal. This will vary based on who you work with. Let’s look at these possible options:
- Drive-by Appraisals. This is where an appraiser drives up to the property mostly assessing the outside value of them home. They then compare this to other homes in the area and come up with an appraisal value.
- Desktop Appraisals. This allows the appraiser to appraise the value of the home without physically visiting the home or driving by. They use public record, MLS data, and documents provided by the owner to come up with an appropriate value.
- Curbside Appraisals. This is when a homeowner walks an appraiser through the home via a Zoom or FaceTime call. This helped push appraisals and closings through during the height of the pandemic and some lenders have continued the practice.
No matter the reason for your appraisal, it’s important to work with people you can count on. Churchill Home Loan Specialists are committed to doing what’s right for you. If you’re looking to buy or refinance, we want to be by your side.