If you're going to take out a mortgage on your house (first mortgage or refinance, doesn't matter), the bank is going to want to know the value of your property, so they're going to send out a house appraiser. Most people don't challenge the lender's choice of appraiser. Which is not the best way to go. Read on to find out why.
Prior to the Home Valuation Code of Conduct (HVAC, 2009), mortgage brokers and lenders could hire their own appraiser. After the Home Valuation Code of Conduct, they cannot, they must get the job done through an intermediary - Appraisal Management Companies, or AMC's. Appraisal Management Companies are in the business to make money. They make more money when they work with a home appraiser that charges little. Even if that appraiser lives too far away away.
That's got a lot of people complaining about appraisers who don't live close to the properties they appraise. How are they going to get their $200,000 mortgage, for instance, if an appraiser that lives two counties away says their $400,000 home is worth $195,000?
But the issue isn't where the appraiser lives. The issue is that the appraisers don't know your neighborhood and/or they can't get the information on your neighborhood that he needs (without spending extra; and they're not going to spend extra because they're paid too little). There are home appraisers who live only 5 miles from your home and who don't know your neighborhood.
Which means, when the appraiser calls to set up a time to come to your home, you don't ask them questions like, 'Where's your office?' or 'Where do you live?' Instead, you ask them how often they appraise in your area. You ask what they consider to be your neighborhood and why. If you know your neighborhood, you will know if you should let them appraise your home.
Then you have to find out about their work ethics. You do that by asking them if they have to see your attic and your crawl space. Because home appraisers have to get their head and shoulders inside the crawl space, inside the attic. Yes, they are supposed to carry a ladder with them, just so they can get their heads and shoulders inside the attics of homes that don't have ladders.
Which means, you should frame the question something like this: Do you have to get into the attic? I don't have a ladder.
'It's okay. I have one,' is the answer you're looking for.
These two question say a lot about the appraisers work ethic. If they're not prepared to go into an attic, they're not prepared to do a lot of other things.
So, even though it's the bank that's sending out the appraisers, interview them when they call to set up the appointment. If he you're not convinced they're up to par, don't set up the appointment, ask your lender to send out another. You owe it to yourself to get a mortgage based on the real value of your home. It used to be that a lot of property appraisers over valued properties. These days, there are a lot who under value. It's just easier and faster. You don't want those. You want the ones who don't over or under value.
Obviously, you also need to look up their license on your State's website, see if they've ever been disciplined and why. You need to ask them for references.
If you're not happy with the answers to the two questions, you call your mortgage broker or the loan officer you're working with and tell them you want another appraiser, one who has better work ethic and/or knows your neighborhood. Asking for another appraiser will push the closing farther away, maybe even beyond when the lock expires. On the other hand, the chances that the first appraiser was going to under-appraiser were great. Also, the odds that they would make mistakes that would slow down the process, or halt it altogether, were also good.
You reduce the chances of mishaps if you interview appraisers when they call to set up the appointment to come out to your home. Don't miss the opportunity.
Though the information in this article is geared towards people who're considering getting a mortgage, it still applies even if deal with appraisers for other reasons. And your attitude should always be: it's my mortgage, I deserve to get the best one I can get. Because the consequences of you not getting that mortgage loan are significant. Because the consequences of you having your house miss-appraised are significant (you borrow too much if it's over valued, you may get a higher mortgage rate if it's under valued).
Author Resource:
A mortgage payment calculator is easier to deal with than interviewing an appraiser. However, interviewing that appraiser makes the difference between you converting the current mortgage rates into the best mortgage rate for you.
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