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The Paparazzi of the Mortgage World

Before you read the following, I need to make it known that I have nothing against home appraisers. Many are fine, upstanding members of the community who uphold the Constitution of the United States, and many help elderly people safely cross busy intersections. Are we good? Okay.

There’s a recent trend out there in the real estate/mortgage world that’s a bit . . . troubling, and it has to do with the appraisal process. As you have already seen, it seems like for the last little while, appraisals have been taking longer, and they’ve been throwing a wrench into the underwriting portion of the mortgage process more often than in the past. In essence, with new guidelines, appraisers have felt like their job has gone from being someone who demonstrates the value of the home on the day of appraisal (that’s not a direct quote from their job description, but it’s close) to a full-fledged home inspector. (I’m not here to argue whether this is justified or not; I’m just telling you what we’re seeing.)

This is resulting in an appraiser writing her/his report pointing out the reasons for the appraised value of the home and making note of particular items that positively or adversely affect that value. We’re still good there. However, in order to cover themselves, they’re taking more photos of the home than the paparazzi after a Taylor Swift concert, and they’re including them in the report. More often than not, while those photos aren’t even referenced in the narrative portion of the report, the mortgage underwriters are seeing all of these “unrelated” photos and using those photos in their decision concerning the underwriting process. In other words, an underwriter may see a “crack” in a wall and hold off on giving an approval by citing concern for that crack – many times, it turns out that it was a bad photo to start with (there’s a reason these folks make their living as appraisers and not paparazzi), and the “crack” was a shadow or a bad paint job; nothing structural, of course. Nevertheless, what the underwriter has seen can’t be unseen, and it has to be addressed and/or explained – this takes considerable time in an already tight post-TRID escrow. Ouch!

While none of us can tell the appraiser how to do her/his job (that change has to be made by someone much higher than you and me), we would advise a seller to take extra time the day before the appraisal to make sure things in the home are organized and more positively “presentable”. The better the photos look, the more favorably the underwriter will look upon the appraiser’s report. (I know that sounds weird, but there you have it – many things in this world don’t make perfect sense.) As for us, we’re ordering appraisals much sooner than in the past to have as much time for you to respond and correct before the closing date. I realize that’s not doing anything to change the situation, but this reminds me of the motto for the Navy’s destroyer, the USS Forest Royal: Praemonitus, Praemunitus – it means, “Forewarned is forearmed.” Make sure you pronounce the Latin correctly or else you might be saying, “I’ll take the full body wax,” and that’s not going to help anybody.

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