Tuesday, September 27, 2011

When Can An Appraisal Be Ordered?

When can the appraisal be ordered? Today's winning question by Michele Fuxan Jones of Home Real Estate addresses that issue. Michele receives a $25 Starbucks card and gets her contact information sent to the 6,600 people on our contact list. We also list her contact info on our blog (10,199 visits for the first 6 months of 2011) and on our blog at Active Rain, a real estate blog with more than 210,000 members.

Michele's contact info follows:

Michele Fuxan Jones

Michele's question is: I’m noticing that appraisal deadlines are moving ever closer to the closing date. Perhaps that’s advantageous for the buyer since it gives them another “out” late in the process. But it can be particularly nerve wracking for the seller. When can an appraisal be done and still meet current guidelines?

Here's the answer: Lenders are not allowed to charge for an appraisal until after the loan application is signed, but the new regulations don't define when the appraisal can be done.

It's always best to wait until the inspection has been completed before ordering the appraisal, however, because the appraiser needs to have a copy of the final contract before completing the appraisal report. Inspection issues often result in changes to the sales contract, and if the appraisal has already been ordered before the final contract is drawn up, delays are sure to occur.

Also, some deals fall apart completely after inspection. No buyer wants to pay for an appraisal on a house they're not going to buy.

The most important thing for buyers, sellers, and their real estate agents to keep in mind is that the sales contract does not really affect the underwriting process. The sales contract is between the buyer and the seller, and does not involve the lender. Good lenders always try to get loans approved as quickly as possible, but if an agent puts an unrealistic deadline date in a contract in the hopes of speeding up the lending process, they are most likely going to have to prepare an amendment to the contract to get the date changed.

If you're ever in doubt about what dates to enter in a contract, the best thing to do is ask the lender and use the dates the lender recommends.

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