The Abc's of Understanding the Appraisal Process

 

While it might seem complicated, understanding the appraisal process is as easy as learning your ABCs. Okay, so it might be a pinch tougher than learning your ABCs, but the good news is that’s what we’re here for: to answer any appraisal questions and guide you through the appraisal process one step at a time. With a typical appraiser completing 10-15 appraisals per week, understanding the process will help you prepare your expectations and eliminate potential confusion. You’ll understand the steps that you need to take as well as the steps the appraiser will take before the appraised value is complete. After all, knowledge is power. Use this step-by-step guide as a way to dig deep into the appraisal process and gain valuable knowledge for today and beyond.

A IS FOR APPRAISER SELECTION.

This step comes before you ever submit an appraisal for review and is perhaps the most important step you’ll take. When choosing an appraiser, ensure you’re streamlining your appraisal process by gathering all of the necessary documents. Get copies of the appraiser’s license(s), E&O, resume, sample appraisals, and check their status on ASC.gov. Remember, you want to make sure you’re hiring a certified appraiserwith the appropriate qualifications, and not just the guy with the lowest bid. By having the information above, you’re ensuring that you’re selecting bidders (and in turn, appraisers) based on highest quality as opposed to lowest price.

B IS FOR BANK OR CREDIT UNION RESPONSIBILITY.

One of the keys to the appraisal process is gathering appraisal forms and documents. Below are the things you need, or the things your AMC will need, for the appraiser to complete the appraised value:

1. A checklist of documents/information needed for particular order types. This is an internal checklist of items used to gather before submitting an order.
2. For reviews of an appraisal addressed to a different financial institution, your AMC needs an Appraisal Transfer Letter from the engaging bank in order to contact the appraiser for revisions. In addition, they’ll need an appraisal authorization letter (see next item).
3. An appraiser authorization letter is needed when an AMC did not engage the appraiser for the assignment. As such, the AMC needs an authorization letter to let the appraiser know they have permission to discuss the appraisal and any revisions with the AMC.
4. When it’s a construction loan, the appraiser will need a copy of the plans and specifications.
5. If the appraisal is for a purchase, the appraiser needs a copy of the sales contract.
6. When the property is non-owner occupied, there are typically leases and/or rent rolls that the appraiser will need. Gather these up-front.

C IS FOR THE COMMERCIAL APPRAISAL PROCESS.

Commercial appraisals don’t have to be complicated. When it comes to commercial appraisals, here’s how the appraisal process works at MountainSeed:

1. The client (that’s you – the bank or credit union) submits the order.
2. The AMC (that’s us) reviews the new order, requests additional information from the client if necessary, and sends out for bids.
3. Appraisers have one business day to respond to the bid request.
4. We review the bid results and release them to the client.
5. The client selects a bid and triggers assignment of the order.
6. The appraiser accepts the order.
7. Our operations team follows-up with the appraiser and checks for specific “milestone” completions. These might include anything from whether the appraiser able to reach the borrower/property contact and schedule the inspection to whether the inspection held. It also might include things like a reminder that the due date approaching, or following-up with appraiser if they miss their due date and are past due.
8. The appraiser uploads their completed report (initial submission).
9. MountainSeed begins our review.
10. The reviewer requests revisions if necessary.
11. The appraiser uploads their revised report if applicable.
12. The reviewer uploads a completed review.
13. Our QA specialist completes a final quality check and completes the assignment for the client.
14. The client receives a notification that their order has been completed and retrieves the documents.

D IS FOR DETERMINING AMC NEED.

If all of these steps seem overwhelming or stressful, perhaps you should consider hiring an appraisal management company. An AMC can do a lot to alleviate some of the headaches surrounding the appraisal process. For example, since we recommend checking your appraisers’ licensing and status, MountainSeed tracks ASC disciplinary actions and the appraisers’ licenses and E&O expirations for our clients. Because we’re taking care of this for clients, it’s one less thing they have to add to their plate. Another benefit? A client doesn’t have to use us for every step of the process. One of the things we suggest is using an AMC like MountainSeed simply for your reviews. This allows clients to keep their ordering internal while having the added benefit of an AMC.

If you’re looking to streamline your appraisal process, let’s talk. We’re ready when you are.