What slows down a closing? Part 3: Appraisers and volume
The appraiser is the only real estate professional in the mortgage transaction that has training in valuing real estate. Let that sink in for a moment...
Agents receive 0 hours of required or reviewed education. If they're lucky, their broker asks them to perform a comparative market analysis on their own home, reviews it, and sends them on their way. Lenders receive 0 hours as well. They have access to an algorithm that shoots out a range of values and risk score, but all of this is based on too many assumptions to be taken seriously in 75% of cases.
The appraiser's job in the transaction is to provide an independent and unbiased opinion of value to their client, for the purposes of the client. The "client" in this case is not the borrower, but the borrower's lender. The lender uses the appraisal to assess the bank's risk in writing the loan. So, with that basis, let's look at the things that can slow down the closing when it comes to the appraisal.
Appraisal Management Companies - these organizations shop appraisals around for days and weeks to find the lowest fee. Insist that your lender does not use an AMC, or if they do, that they pay the customary and reasonable VA schedule of fees to ensure no delays by the AMC.
Undisclosed defects - if there are defects that will cause a loan to not go through (safety/structural issues, chipping paint on an FHA property) and they have not been fixed prior to the appraisal, expect your closing to be delayed. This is an easy problem to avoid - ask your loan officer and agent, "Are there any defects with the home that need to be repaired in order for this loan to close?" and have them repaired prior to the appraisal. Otherwise, the appraiser will have to come back out to the property (more money) after the repairs are made (more time).
Slow communication - As an appraiser, it shocks me how long I wait to get responses from agents and loan officers. I currently have a report on my desk that I have been waiting 5 months for the lender to give me instructions on how to proceed with a property that needs repairs. When I investigate sales in my analysis and call agents, sometimes I get a call back a week later. Every minute that I wait, is a minute your loan is waiting to close. Encourage your agent and loan officer to be prompt in their communication. Your loan isn't the only one they are covering, but that's no excuse to not respond to emails within a business day.
Complex properties - I think that some people think that appraisers punch numbers into a program and get a number out of the process... what takes so long?! This could not be further from the truth and is made very clear on complex properties. A complex property requires more information, more research, more comparables, more analysis. If you have a complex property, expect the process to take at least two weeks.
Low fees - if I am provided a low ball fee in the middle of nowhere, then I'm going to have to wait to schedule that appraisal until I have other reports in that same general area in order to make the fee worthwhile. The old adage "You can have it 1) Cheap, 2) Fast, 3) Good - you get to pick two," is very apt. If you want a cheap appraisal, expect that it is going to be slow.
Silly revisions - Appraisal Management Companies and poor underwriters can come up with some odd questions that have to be asked, sent, answered, and received. My all-time favorite remains, "Is the 5,000 square foot city lot a working farm?" It took me a few minutes to put together a professional and non-sarcastic response to that one. A few minutes the loan was delayed by... multiplied by thousands of appraisals nationwide. This isn't just a little problem, it's reported by appraisers nationwide and slows down the whole system.
Low tech appraisers - if your appraiser shows up to your home with a clipboard and a tape measure, you can expect a slow appraisal. These have not been industry-standard tools for modern appraising in a decade. There are many tools available to appraisers to make the process more efficient. Appraisers... evolve or die.
High volume - in the same way, that loan officers and agents can become swamped during the heaviest times of volume, so too can appraisers. Attempts have been made in order to help in this regard - like allowing appraiser trainees (who have received 75 hours of education and 400 hours of on-the-job experience) to inspect properties on their own. However, nearly all lenders refuse to allow for this. Currently, there is a push by lenders to allow non-professional inspectors to take photos of homes and have appraisers use those pictures... let those two sentences sink in and try to figure out what the real motive is (hint: it's cheaper to send a non-professional than a professional to take photos). Sadly, during high-volume seasons, you can expect delays. When the appraiser contacts you to schedule the appointment, understand that this is more akin to a house call by a doctor, not a cable guy appointment.