Who pays for a second appraisal? Well, that all depends on whether you are getting an appraisal for yourself or through a lender. Let’s say you were buying a home using conventional financing and the first appraisal done was denied by the bank.
You have already paid $300-$450 for an appraisal now what? The first step is to contact your lender and get a copy of the appraisal report. You can give that to another appraiser for them to review. This might not get the original appraiser to change their mind, however, it’s worth a shot.
If this doesn’t work you can get with your lender and let them know you don’t have the extra money to pay for a second appraisal. This might prompt them to lower the price or give you a credit towards getting a new one. More than likely the lender approved the appraiser in the first place. So, they should help you with this situation.
The lender doesn’t want to lose out on a great borrow because of a botched appraisal. If you contact them I am all most certain they will find a way to get this done for you. The market is way too competitive for them not to.
The lender ordered a second appraisal, why?
Lenders and banks are loaning millions of dollars to potential homeowners and occasionally they need to get a second opinion of value. Here are some common reasons why this might happen to you:
- Too much time has elapsed and the original appraisal cannot be used. Appraisals don’t expire, but lenders may refuse to use them if they think they are too old. Some markets change drastically in a short time, so an appraisal 3 months ago might not reflect the true market value of the subject property
- The original appraisal was flawed and unusable
- The lender’s client requires a second appraisal to process the loan
- In transactions where a second appraisal is required by law.
- When the policy requires a second appraisal if a property is resold
between 91 and 180 days following an acquisition by the seller if the resale price is 100 percent. This occurs mainly in rehabbed properties.
What is an appraisal Review?
An appraisal review happens when an interested party requests an analysis of all aspects of the original appraisal report by another certified appraiser. According to USPAP an “appraisal review” is defined as “the act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed as part of an appraisal or appraisal review assignment.”
The second reviewer must not have a personal relationship with the original appraiser or the parties involved. That way they can remain unbiased during the assessment of the property.
Why are appraisal reviews needed?
Here are some common reasons why an appraisal review is needed:
- They can be helpful in supporting litigation or disputes
- Appraisal reviews are used to assess the work of inexperienced appraisers with limited capabilities
- To reinforce a client’s confidence in the original report.
- Used for clients who may always want a second opinion when purchasing or selling property
- If the original appraisal is biased or tainted in some way