Valuation Management Group strives to keep its clients and appraisers informed about best practices in the real estate appraisal profession. Our goal is to assist appraisers in improving efficiencies.
A review of common underwriting requests suggests that a large number of requests are purchase contract related, such as homeowner’s association dues not being reported as per the contract. To avoid unnecessary revision requests, VMG recommends that appraisers review the contract for any amendments, counter offers and/or special stipulations. It is common that seller paid closing costs are revised or added in the amendment or special stipulation section of the contract. The date of the contract as reported on the appraisal should reflect the binding agreement date.
In regards to required homeowner association dues, there is typically a community disclosure agreement provided with the contract. The community disclosure should note the amount of the HOA dues along and indicate if they are paid on a monthly or annual basis.
Seller disclosures are also another helpful document. A quick review of this document can tell the appraiser if the property has any current or prior issues or if the property is on a private or public water and waste system.
A suggestion to lenders ordering appraisals would be to scan the purchase contract with the most recent amendment as page one of the document so that any contract amendments and terms of purchase are prominent. This would help to ensure that any changes made during the negotiation process are not missed. Also, uploading the community and seller disclosure with the contract will assist the appraiser in properly reporting the information for the subject. The contract should be fully executed by all parties.
Lastly, and somewhat related, another common revision request is that the “NO” box is inappropriately checked on the appraisal for the question: “Has the subject property been offered for sale in the prior 12 months?” It is important to remember that the question states “Offered,” so even if a property is not listed, but is under contract for sale, it has been offered by the seller to the borrower; therefore, the “YES” box would be applicable.
These tips are provided to help avoid common revision requests as it pertains to the contract section and sale information that is reported on the appraisal report.
Valuation Management Group is a national, full service appraisal management service company that manages the appraisal process for financial institutions, banks, mortgage bankers, and credit unions. We offer the full array of commercial and residential appraisal products and services. We take the appraisal process from ordinary to extraordinary.