Portland Area Real Estate Appraisal Discussion

Portland Appraiser Explains Appraisal Ordering for Lending Appraisals
April 8th, 2015 2:06 PM

Portland Appraisal Burgers

A Quality Appraisal, LLC specializes in appraisals for non-lending or private parties (divorce, estate, presale, etc.), but we receive emails and phone calls almost every day from Portland area homeowners wanting to price or order an appraisal to use for home refinancing or other lending purposes.  Some of these callers just want to know what we charge to compare with the lender’s good-faith estimate and to make sure that they are not being overcharged.  In these cases, we are always happy to provide a quote. 

Other callers want to order their own appraisal before refinancing.  I explain to such callers that lenders typically have their own networks for ordering appraisals and that the caller will need to check with the lender before proceeding with an appraisal from our company.  There are two reasons for lenders stipulating who and where your appraisal is ordered.

1.  After the recent mortgage crisis, rules adopted that made it mandatory for government-sponsored loans like Fannie Mae and Freddie Mac to ensure stricter appraiser independence.  (For instance, no pressure is permitted for appraisers to meet a number.)  Prior to these new requirements, it was common for appraisers to receive calls from loan professionals asking if the appraiser could perform an appraisal on a particular property at or above a particular value.  Some lenders would incentivize the appraiser by saying, “We will send you lots of work if you can get this done for us.”  I received such calls almost daily prior to the mortgage crisis, and some appraisers got themselves into trouble by accepting these offers. 

Now, lenders are required to ensure that appraisals are ordered and paid for by people who do not benefit from the appraisal value (This includes homeowners and lenders.).  If a homeowner provides an appraisal to the lender that the homeowner ordered, the lender cannot ensure regulators that the homeowner has not influenced the appraiser.  The easiest way for a bank to confirm compliance is by outsourcing appraisal orders with an Appraisal Management Company (AMC).  The AMC locates and engages the appraiser, provides instructions to the appraiser, usually checks the appraisal for quality, pays the appraiser, and delivers the appraisal report to the lender without any direct communication between the lender and the appraiser.

2.  Lenders typically have proprietary requirements regarding appraisal development and reporting.  Homeowners ordering an appraisal likely do not have the specific instructions required by the lender for the appraisal.  This could also apply to private lenders who may “portfolio the loan” or do not plan to sell the mortgage on the secondary market.  If the lender orders the appraisal through normal channels, the lender can make sure that the correct guidelines are provided to the appraiser.

Have I left anything out or do you want to join in the conversation?  Let me know in the comments below.

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Thanks for reading,

Gary F. Kristensen

Great article Gary and very informative as usual especially for anyone looking for a Portland appraiser.

Posted by Roy Meyer on April 8th, 2015 2:16 PM
Thank you Roy for your support and making it possible for A Quality Appraisal to focus only on non lender work.

Posted by Gary Kristensen on April 8th, 2015 2:21 PM
I just got one of these calls this week as well Gary. Thanks for putting together a good explanation of how things work now. I'll be sure to show them the link so they can read your post and hopefully understand how we do things these days. Great post.

Posted by Tom Horn on April 8th, 2015 4:53 PM
HAHA, Great intro image! You should turn this one into an Animoto video. Heck, if you don't then I will!

Posted by Mike Turner on April 8th, 2015 5:04 PM
Thank you Tom and Mike for your comments. Tom, I was planning on linking this article for the same purpose. Mike, that is a great idea.

Posted by Gary Kristensen on April 8th, 2015 5:51 PM
Nice job, Gary. I love the graphic. I have a somewhat related post coming out at some point. How appraisals are ordered is an unknown to many.

Posted by Ryan Lundquist on April 8th, 2015 6:48 PM
Thank you Ryan. I had fun with making the appraisal ordering menu. In our office, we joke about easy appraisals being "ranchburgers". That's how I got the idea. Then I realized that the 1004MC sounds like Pepsi.

Posted by Gary Kristensen on April 8th, 2015 6:54 PM
I love the image, I don't see the McPpraiser burger, oh that's right these are made fresh daily instead of the ones at McPpraisals.

Posted by John Tsiaousis on April 27th, 2015 3:37 PM
Valuable post ! I am thankful for the points . Does anyone know where my business could possibly locate a template Shipper\'s Letter of Instruction form to work with ?

Posted by yuki samantha on September 8th, 2016 2:02 AM


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