What Is An Appraisal Review?

When you’re buying or refinancing a home, the appraisal is a key part of the process, determining the fair market value of the property to ensure the buyer isn’t overpaying and the lender is making a sound investment.

 

However, there are times when the initial appraisal might raise questions or concerns. In these cases, an appraisal review might be necessary.

 

What Is An Appraisal Review?

An appraisal review is a second look at the original home appraisal to ensure its accuracy and reliability. It’s a quality control measure that involves a second appraiser going over the original appraisal report. The goal is to verify the initial appraisal was conducted properly, that all relevant data was considered, and that the final valuation is reasonable and supported by evidence.

An appraisal review is different from fact checking which focuses on verifying the correctness of specific details or information within a document. While an appraisal review may include some fact-checking, it goes further by assessing the overall quality and validity of the appraisal as a whole.

There are two main types of appraisal reviews:

• Desk Review:T his is the most common type of review. It involves examining the original appraisal report from an office, without visiting the property. The reviewer checks the accuracy of the data, the methods used, and whether the conclusions are supported by the information provided.
  
  
• Field Review: This is a more in-depth review. It not only includes a thorough examination of the original appraisal report but also involves an inspection of the property from at least the street and a visit to comparable properties. Field review are more detailed and are usually conducted when the initial appraisal is questionable or when the stakes are particularly high.

 

When Is An Appraisal Review Needed?

There are several reasons why an appraisal review might be necessary. Here are a few common scenarios:

1. Questionable Appraisal Results

If the initial appraisal results seem off or inconsistent with other properties in the area, an appraisal review can help verify the accuracy of the original report.

2. Large Discrepancies

If there’s a significant difference between the appraised value and the purchase price or the value expected by the buyer or seller, a review can help clarify the reasons behind the discrepancy.

3. Lender Requirements

Sometimes, lenders have policies that require a second look at appraisals that exceed a certain value or involve complex properties. This is a standard procedure to ensure that the lender is making a sound investment.

4. Regulatory Compliances

Lenders might order an appraisal review to comply with regulatory requirements, especially when dealing with government-backed loans. Ensuring that the appraisal meets all the necessary standards is crucial for the loan approval process.

5. Peace of Mind

For buyers, sellers, or other stakeholders, an appraisal review can provide peace of mind by confirming that the property’s valuation is fair and accurate. It adds an extra layer of confidence in what is often one of the biggest financial transactions of a person’s life.

6. Litigation Support

An appraisal review is essential for litigation support to ensure accuracy, fairness, and compliance in property valuations. It can challenge the original appraisal, provide expert testimony, support legal arguments, and meet court requirements, all of which are crucial for achieving a fair outcome in legal disputes involving property value.

 

Who Orders an Appraisal Review?

Appraisal reviews are typically ordered by lenders, but they can also be requested by other parties involved in the real estate transaction. Here’s a breakdown of who might order an appraisal review.

1. Lenders

Lenders are the most common party to order an appraisal review. They do this to protect their investment and ensure that the loan amount is justified by the property's value. If a lender has concerns about the accuracy or quality of the original appraisal, they will order a review to double-check the results.

2. Government Agencies

In some cases, government agencies like the Federal Housing Administration (FHA) or the Veterans Affairs (VA) might order an appraisal review as part of their oversight processes, tax purposes, or right-of-way-acquisitions.

3. Buyers or Sellers

While less common, buyers or sellers might request an appraisal review if they believe the initial appraisal was inaccurate or unfair. For example, a seller might request a review if they believe their property was undervalued, while a buyer might request one if they feel the property was overvalued.

4. Attorneys

In cases of disputes, divorces, or estate settlements, attorneys might order an appraisal review to ensure that the property’s value has been assessed fairly and accurately.

5. Insurance Companies

An insurance company may order an appraisal review to ensure accurate property valuation, manage risk, prevent fraud, ensure compliance with regulations, and resolve claim disputes. This helps them provide fair coverage and protect against potential losses.

 

An appraisal review is an important tool in the real estate process that helps ensure the accuracy and reliability of a property’s valuation. Whether ordered by a lender, a government agency, or an individual involved in the transaction, the review provides an extra level of scrutiny that can prevent costly mistakes and ensure that everyone involved is making informed decisions. understanding its purpose and process can help you navigate the situation with confidence.

 

Need An Appraisal Review In Phoenix AZ?

If you find yourself in a situation where an appraisal review is needed, Master Appraisal Services can help. From a single family home, age restricted community. condo, golf property, exclusive estate or mobile home we can help with an appraisal review in the Phoenix area including Scottsdale, Chandler, Gilbert, Mesa, San Tan Valley and surrounding areas.

Give us a call to schedule your appraisal review.