A downloadable TRID info. sheet for FSBO sellers and real estate agents
For those that are not familiar with TRID I’ll give you a simple explanation. TRID stands for TILA/RESPA Integrated Disclosure Rule and it
replaces HUD’s Truth-in-Lending disclosure & Good Faith Estimate. Without going into the details, it seeks to simplify the calculation and disclosure of closing fees in a real estate transaction. It helps lenders provide closing cost estimates to consumers that will not change.
To help them do this there are certain costs associated with these transactions that have zero tolerance for change, and appraisal fees are included. Once an appraisal fee is quoted, for all practical purposes, it cannot be changed. This can be harmful to appraisers if a property is not typical and falls outside of the norm. These non typical properties may require a different scope of work and a higher fee. If a standard appraisal fee is collected and the appraiser must put in additional work because of the complexity of the assignment he/she will not be able to collect a commensurate fee.
The form I have created will help the lender know what the property is like so they can include an estimated cost for the appraisal that reflects the complexity of the assignment and pays the appraiser a fair fee.
The TRID form
The form I have included here, which you can download and use, can be filled out with the subject property information and provided to the lender. By doing this the loan officer will have all the information about the property so their closing cost estimates will be accurate and they can quote a customary and reasonable fee.
I have recently started to include this form with all of the pre-listing appraisals I perform. By doing this, either the owner/seller or real estate agent involved in the sale can provide this document to the buyer’s loan officer.
What’s included?
In order for the loan officer to estimate an accurate fee it is important to have as much information on the property as possible. The following are some of the items included on the sheet and the reason why it’s important. Click here to download the form, or you can also click on the image.
Address: This information is basic but it can be helpful in determining if the property is rural which can increase the cost of an appraisal.
Land size: If a house is located on acreage, and it is larger than typical, this can make it difficult to locate comparable sales. This can result in a higher fee due to the additional complexity of the assignment and time involved.
Gross Living Area (GLA): A larger than typical home can involve more work during the appraisal inspection as well as more time in the development of the appraisal. Again, knowing this information up front can help quote and appropriate fee.
Additional features: Additional features can add to the complexity of an appraisal assignment. When attempting to find comparable sales appraisers try to bracket the features of the subject property to get a more accurate value estimate.
With the recent introduction of the Fannie Mae Collateral Underwriter tool it became apparent that this government-sponsored enterprise has access to millions of detailed property records that they have been collecting from appraisers over the years. If they have access to this type of accurate property information would it be possible for them to provide this to the lender so the lender can estimate an appraisal cost more effectively? So far they have chosen only to use this information to question the work done by appraisers, however if they really want to contribute to the streamlining of the mortgage loan progress it seems logical that they may want to consider providing information on the subject property up front to the lender.
How to use the form
- Download and print the form
- Fill out completely
- Provide to the buyer’s lender so they know as much information about the home and can quote an accurate fee, which will help the loan process go smoother and quicker
Conclusion
The bottom line is that the more information that the lender or loan officer has the better chance they have at quoting an appraisal fee that is customary and reasonable. Feel free to add to or edit the form for your own purposes, but if you do please let us know what you did so we can all learn from each other.
Question
Is there any other information you can think of that would be helpful for the lender to know? I’d like to get your take so let me know your thoughts. Thanks for reading.
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It will be interesting to see how TRID plays out as it relates to appraisal fees. Lenders and AMCs in my market are already having a very hard time finding appraisers to do complex properties. Everyday I see appraisal orders circulating for extremely complex luxury estate properties and they have fees on them that represent only about a 20 percent increase in fee. In my experience, these complex properties take more than twice as long to appraise and have ten times the liability (it is much easier to justify a lawsuit against an appraiser on a million dollar property than on a median priced property). Hopefully TRID will eventually force lenders to budget more for appraisals.
You make a good point about the larger homes taking so much longer. From a business perspective I always compare the fee for the larger home against how many smaller homes I could do in the the same amount of time and usually turn down the larger home due to fee. Thanks for sharing your perspective Gary.
Thanks Tom. The funky thing is the loan officer / brokerage is probably going to quote a fee before the appraiser sees the appraisal order. That’s backwards in the entire process, and one of the potential consequences is a complex appraisal might only go to the appraiser who is willing to do it for less. This means loan officers need to be very in tune with complex properties. Realize too many appraisers have their pick of clients, so fees seem to be on the rise. If an appraiser can get a decent fee for a standard property, that complex one is no longer worth it for just $25 more (or a very minor fee offered by AMCs).
That’s true Ryan. I think it is important that if the appraiser discovers the property to be non typical, and requiring a higher fee, they should push for the higher fee and not let it slide. If this happens enough then the whole process will need to be redone since they’ll have to keep redoing the closing cost estimates. They should be required to get info. on the property before quoting the fee. It would be like taking your car to a garage and the mechanic being required to quote a set fee regardless of what is wrong with car. Thanks for sharing your thoughts.