Home Appraisals Receiving Tighter Scrutiny

The days of quick home appraisals seem to be coming to an end, even at times being problematic. Lenders are becoming more demanding, and often calling for second appraisals on a home before giving the green light. Where does this stem from? Of course, from the problematic home loans of the past that got us into this housing crisis in the first place. Lenders and buyers are being more cautious. For example, a lender may scrutinize an appraisal if a borrower has a marginal credit score or high debt level relative to income, or if the property was in foreclosure and was fixed and flipped by an investor. Appraisals are based on historic data, and therefore often lag behind home values. Inadequate comps might present a problem – if the comps are deemed too far away from the subject house, or the sale happened too long ago. A second appraisal starts from scratch, and involves a whole second set of costs, traditionally paid by the buyer. Finally, lenders might order a second appraisal if the first one is based on factual errors or the appraiser wasn’t competent in the area.

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