Lenders and Appraisals

2 Replies

I have started discussions with lenders to refinance a MF in Phoenix and I was curious about appraisals and the cost incurred by them.

Quick background: There are currently 10 CLOSED listings from the past couple of months on the MLS of other MFs exactly like mine (same build). So it's very easy to see a trend in the going price of my building.

  1. Should I be expecting all lenders to be doing the more expensive walk-thru appraisal, or could there be some out there that will charge me less for cheaper alternatives (i.e. drive by, or even just looking at comps on the computer?)
  2. Do some lenders ever make appraisals "free" as part of their products?
  3. Am I just wasting my time discussing appraisal cost with potential lenders since there are obviously more important aspects of the loans to discuss?
Originally posted by @Ryan Moore :

I have started discussions with lenders to refinance a MF in Phoenix and I was curious about appraisals and the cost incurred by them.

Quick background: There are currently 10 CLOSED listings from the past couple of months on the MLS of other MFs exactly like mine (same build). So it's very easy to see a trend in the going price of my building.

  1. Should I be expecting all lenders to be doing the more expensive walk-thru appraisal, or could there be some out there that will charge me less for cheaper alternatives (i.e. drive by, or even just looking at comps on the computer?)
  2. Do some lenders ever make appraisals "free" as part of their products?
  3. Am I just wasting my time discussing appraisal cost with potential lenders since there are obviously more important aspects of the loans to discuss?

 1 and 2: You might get an appraisal waiver from the lender's automated underwriting system, which would reduce it to zero dollars and zero cents. No way to get the feedback from the lender's automated underwriting system without fully applying - paystubs, tax returns, credit pull, whole 9 yards. Not all lenders will honor this.

3: Yup, more or less. The only question worth asking is if the lender in question will honor an appraisal waiver from their automated underwriting system, should one arise once you fully apply.

Also, quick note, if there is an appraisal required -- lenders pick the AMC used, and the cheapest AMCs have the lowest quality appraisals that are least likely to accurately capture the full value of the real estate in question. Get what you pay for. The AMC I use is about $100 more expensive than the generics, the only time I deviate and use a generic is when the client insists, and I make it clear in these cases that the cheapo AMC also doesn't have time to deal with appraisal rebuttals when (not if) the client does not like the number the cheapo appraiser comes back with. You are barking up the wrong tree by trying to 'negotiate' saving $75 or $150 on the appraisal fee, since it's almost certainly going to result in the exact opposite of what you want.

Originally posted by @Chris Mason :
Originally posted by @Ryan Moore:

I have started discussions with lenders to refinance a MF in Phoenix and I was curious about appraisals and the cost incurred by them.

Quick background: There are currently 10 CLOSED listings from the past couple of months on the MLS of other MFs exactly like mine (same build). So it's very easy to see a trend in the going price of my building.

  1. Should I be expecting all lenders to be doing the more expensive walk-thru appraisal, or could there be some out there that will charge me less for cheaper alternatives (i.e. drive by, or even just looking at comps on the computer?)
  2. Do some lenders ever make appraisals "free" as part of their products?
  3. Am I just wasting my time discussing appraisal cost with potential lenders since there are obviously more important aspects of the loans to discuss?

 1 and 2: You might get an appraisal waiver from the lender's automated underwriting system, which would reduce it to zero dollars and zero cents. No way to get the feedback from the lender's automated underwriting system without fully applying - paystubs, tax returns, credit pull, whole 9 yards. Not all lenders will honor this.

3: Yup, more or less. The only question worth asking is if the lender in question will honor an appraisal waiver from their automated underwriting system, should one arise once you fully apply.

Also, quick note, if there is an appraisal required -- lenders pick the AMC used, and the cheapest AMCs have the lowest quality appraisals that are least likely to accurately capture the full value of the real estate in question. Get what you pay for. The AMC I use is about $100 more expensive than the generics, the only time I deviate and use a generic is when the client insists, and I make it clear in these cases that the cheapo AMC also doesn't have time to deal with appraisal rebuttals when (not if) the client does not like the number the cheapo appraiser comes back with. You are barking up the wrong tree by trying to 'negotiate' saving $75 or $150 on the appraisal fee, since it's almost certainly going to result in the exact opposite of what you want.

Thanks Chris.  Sounds like I just need to be asking if they will honor any appraisal waiver from their underwriting system and about the quality of their company they will use.

Thanks for the article link also.  Read it all, just reinforces the need to always be checking everywhere, not just sticking with the same person/company I've been used to.