FAQ: Does the appraisal stay with a property?
This week I had two people ask me a similar question so I thought I would share my answer with you. The question had to do with whether an appraisal report stays with a property, and if so for how long. In addition to that, they wanted to know if other appraisers had access to the appraisal. Let me give you some examples.
In one situation a home was under contract and an appraisal had been done that was lower than the contract amount. The question I was asked was whether the appraisal stayed with the property, and if so for how long.
They also asked whether the report was available to any appraiser that may be appraising the property in the near future. This was asked because they were unsure if the newer appraiser may be influenced by what the original appraiser valued the house at.
The second situation occurred when a refinance appraisal was done and the owner had reason to believe that the appraisal was not valid because the appraiser did not appear to be from the area and may not have known the local market. The owner was concerned that they may not be able to refinance because of the low appraisal, and they wanted to know how long the appraisal would be associated with the property.
Valid questions, reasonable concerns
These questions are valid and the concerns are reasonable. It is not my intention to discredit appraisers that provide reports that are lower than the owners or buyers think they should be. Most of the time I have found the appraiser is going to be correct because their value is provided without bias as a disinterested third party.
What I would like to do is provide information about whether the appraisal report stays with the property and who has access to it.
The only time an appraisal report stays with a property is when it is financed with an FHA or VA loan. When this type of loan is used a case number is assigned to it, and the case number follows the property.
Let’s say that a home is under contract and an appraisal is ordered and completed. Let’s also imagine that the loan falls through because the appraisal was less than the contract.
If a subsequent buyer comes along and a contract is written at the same price, or some price higher than the appraisal came in at, then there could be problems with this deal too. It should be noted that case numbers are automatically canceled after six months unless they are renewed.
The bottom line is that with FHA and VA loans there is a possibility that the appraisal will stay with the property depending on when the original appraisal was done and when the case number was issued. Conventional loans are different because there is no case number or attaching of the appraisal to the property.
The second concern had to do with who sees the appraisal report. The main concern here was whether a second appraiser might have access to the first appraisal that was done because if they did then it might influence them.
An appraisal report that is done for a conventional loan, or any other reason other than FHA or VA, is only seen by the person ordering it and anyone else they give it to. Any appraiser that may be doing a subsequent appraisal will not have access to the prior appraisal unless it is given to them by the party that ordered the first one.
An appraisal ordered by a bank or mortgage company is the property of the company that ordered it. By law, they are required to provide a copy to the borrower. If you did not get a copy during a recent purchase or refinance it may have been an oversight and you should request that they provide you with one.
As you can see, with regard to whether an appraisal stays with a property it will depend on what type of financing is being done. Since a case number is assigned to FHA and VA loans the appraisal will stay with the property for a period of time, however, this is not the case with a conventional loan. Also, appraisers do not have access to prior appraisals on a home unless a copy is given to them.
Question
Do you have any other questions about who has access to an appraisal and how long the report stays with the property? If so leave a comment below and we’ll keep the conversation going. As always, thanks for reading and commenting.
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regarding selling home-so, if FHA appraisal comes in at $200k effective 12/1/21 & I reject that buyer’s counteroffer at 195k; then, anyway, that 200k FHA appraisal amount stays the same for 6 months-correct? Their original offer was 210k.
So, if I get another FHA buyer & they offer 200k within the 6 month period & since the FHA appraisal stays with the house for 6 months-does new buyer need to get FHA appraisal?
please add anything else you think would be pertinent?
Thanks, have a Merry Christmas & Happy New Year!
James, sorry for the delay in getting back to you. It has been a crazy month! The case number assigned to your property stays with it for 6 months so the appraisal would follow the property if you get another FHA buyer within that time period.
The VA Appraisal sticks with the veteran, not the property. VA rules stipulate that if the borrower decides against purchasing the property, a new appraisal must be conducted for future buyers who are subsequently interested in purchasing said property. Prior to January 1st of 2012, this was not true; however as of now, for a VA loan to be used in purchasing a home, the buyer must have their name enclosed on the appraisal.
That’s interesting, Joe. An FHA appraisal sticks with the property but it sounds like this is not the case with the VA appraisal. Does the VA know how much the prior appraisal was for with any subsequent contracts? One concern that agents have is that if a home that is using FHA financing does not appraise and then subsequently uses FHA financing for the second buyer then the appraisal will follow the property and could hinder its sale unless it has a contract less than or equal to the prior appraisal.
So if a VA appraiser vastly undervalued our home (like $100K plus) in a refinance situation, would it be possible to try to refinance with a conventional loan, getting a new appraisal by a non VA appraiser? Or would we have to wait for the VA appraisal to go away? This appraiser tried to say our home only increased in value 7% over the last 7 years, which we find mathematically impossible, given the value of homes around us have increased about 14% in two years.
I am not a VA appraiser, however, it is my understanding that a conventional loan and appraisal will not follow the VA case number. You might want to verify that with a VA appraiser just to be sure.
What do mean it sticks with the Beteran? How does an appraisal apply to a person? It’s the house that is being valued.
Cathy, do you mean veteran? In an FHA appraisal, a case number is assigned to a property and it stays with the property, not the person. If a home does not appraise, and a deal falls through, the appraisal will stay with the property if it goes under contract again. I hope this helps explain the situation.
I have a question. Jan 2020 we had home appraised by the appraiser that knows properties on the lake. She is well known and experience is 40+ years with our lake properties. We had a second appraisal done by same one, in May 2021. This second appraisal just came in $700,000 + less than the one she did a year ago. The market is doing well here, especially, homes on the lake. So, why would this come in so very low than the first that she had done? Home is only 5 years old, 5 acres and 3 boat docks grandfathered in. 6000 sq ft, brick home with attached oversized 3 car garage and 3000 sq ft shed with 3 bay doors, hot & cold water and heat. Among, many other custom amenities. There is a comparable sale 2 doors down that closed 1 month ago.
It is hard to comment on the value of the home since I don’t know the area or the comps. What I might suggest is that if you believe that the value may not be correct you can request a reconsideration of value and submit additional sales that may not have been included in the appraisal.
Hi Tom! What if a buyer originally plans to use a VA loan but the appraisal comes in below the sales price with a lot of conditions…So the buyer decides to switch to a standard conventional loan (which they are preapproved for). Then the new conventional appraisal comes back at the sales price value with no conditions. Will the original VA appraised value affect the buyers ability to use the new conventional appraised value? Any information would be appreciated! Thank you!
Thanks for your question, Dakota. I do not do VA appraisals but I do FHA, which are somewhat similar. I am assuming that a new appraiser has been engaged to perform the conventional appraisal since there is a different value. The VA appraisal will not follow the property unless another buyer uses VA financing as well. To the best of my knowledge, the old VA appraisal will not affect the new conventional appraisal.
Hello Tom and thanks a lot for this thread. My husband and I had our home appraised 2 years ago. Since then we’ve done a significant amount of work both interior and exterior. All of our savings have gone into home renovations along with all of our time away from the kids to boot. We went to refinance with high hopes how our new Reno’s would pay off, plus the market looks promising at the moment while all comparables from our area have been selling quite quickly. Our second appraisal from a different company turned out to be lower than the original appraisal two years prior! I don’t know what to do at this point and do not understand how there could be such a contradiction $70,000 later… any advice would be so appreciated as this has been our lives.
I would like to add how should we compare both reports and try to find discrepancies or validity? Should we have given the second appraiser a copy of the original report from the prior appraisal or is this an attempt to alter an appraiser’s unbiased perspective? The first appraiser seemed thorough and took over an hour while the second went through the 3500 square foot home in fifteen minutes. Is it worth getting the original appraiser back and show him our Reno’s as he offered and seemed eager to do so during his session, and would the bank even accept a second opinion?
Wow, I’m sorry to hear about your bad experience. I think that is a good idea to compare the two reports for differences in the factual information about the house such as the square footage, land size, number of bedrooms and bathrooms, etc. Looking at a 3,500 sf house in fifteen minutes does not seem reasonable to me, however, he may have access to a prior report and maybe he did not have to measure it. The measuring usually takes up at least half of the time at the property while the other half is collecting information about your home. You do have the option of submitting a reconsideration of value. If you do I would suggest providing additional sales that you know about but the appraiser did not use. In addition, if there are any inaccuracies with the factual data about the home you could point that out as well. There may be some small discrepancies in square footage since some people may round and others may not but it should be fairly close. In the future, you may want to provide the appraiser with a complete list of recent renovations made to the home (if you didn’t do it this time) so that they know all that you have done. Good luck.
Thanks a lot for the prompt response Tom, it does bring some relief. I will be applying all of the above-mentioned suggestions, thanks again!
Glad to hear it was helpful. Good luck!
I have a VA buyer, inspection issues were found that VA may require to be repaired. If seller elects to continue working with this VA buyer and the VA appraisal comes in low and requires repairs that the seller refuses to make and this deal falls through, will this VA appraisal affect other VA appraisals for the next 180 days, will it affect FHA appraisals for the next 180 days? Or will it affect both types of appraisal values and requirements on the home for the next 180 days? Thanks!
First off I want to say that I am not a VA appraiser so I am not familiar with all of their policies. The reason that an FHA appraisal stays with a property is because of the FHA case number assigned to it. With that being said I don’t think the VA would affect a future FHA loan because the case number would not be the same. I’m not sure if it would affect future VA loans, however. I check with a friend who appraises VA to see what the policy is.
I had an FHA appraisal done in April that was extremely low. Despite comparables that showed houses that sold much higher and had comparables features, the appraisla management company did not budge. The deal fell through for other reasons with the buyers financing. Now the house is on the market and we have received 3 strong FHA offers in the first three days. I have not accepted them yet because I am concerned about the last FHA appraisal and how it will most likely be revealed to them. This is so frustrating that there isn’t more accountability with these appraisals and I feel my hands are tied and cannot acceot. The market is strong right now and my house is priced well and is showing very well. Any thoughts on how to navigate this?
Ryan, I know we spoke on the phone but I thought I would add a comment here to help anyone else that might be in a similar situation. FHA appraisals do stay with a property and may affect any future offers you may have during the time period that the FHA case number is active and attached to your property. The only situation I can think of that you may be able to challenge this is if there have been some sales that occurred since the first FHA appraisal was done. If newer sale sales support a higher value then the may increase and HUD may allow the new appraisal to supersede the old one.
Tom,
Thank you for this blog. I have a similar situation. New construction appraisal (FHA) completed in February 2021 and value came in low. Say the FHA Case number was assigned in January, would the appraisal expire at the same time as the FHA Case Number 6 months in June 2021?
Yes, Pam, that is my understanding. Since the appraisal follows the case number it would drop off at the same time as the case number. When another case number is assigned it would need a new appraisal since the old appraisal is associated with the old case number.
Hello, what if through a conventional loan a buyer gets an appraisal and it comes in low. Buyer agrees to show seller/listing agent and the listing agent disputes the appraisal because it came in low. Buyer and Seller now do not agree on new price and the listing agent puts the property back on the market. Because he disputed the appraisal and has prior knowledge of it, does the listing agent now have to disclose this appraisal to potential buyers?
No, the appraisal does not have to be disclosed to any potential buyers, to the best of my knowledge. I don’t think it would be wise to do this because an appraisal has already been done and it indicated that the home was overpriced. It is always possible that if and when it does go under contract again there may be a newer sale that occurred that supported that price.
what if you have and FHA appraisal, the deal falls through, house goes back on the market, and now you have a conventional loan? Will that affect the appraisal? thx
Thanks for the questions, Olga. If the second contract is conventional that should not be an issue since the appraisal will not transfer with the property like it would if it were FHA.
I have a house for sale. I FHA refinanced last year ( Feb 2017). The appraisal came back extremely low. I disputed it with the mortgage company. The house next door sold for 20k more than my appraisal 3 months later. Same house. Same floor plan. Same improvements. I put my house on the market this year. It’s under contract but the buyer’s realtor said they pulled the appraisal from last year and wanted to know why the house was priced higher than the appraisal last year. How do they have access to this information ? Will it hurt my current sale?
That sounds odd because no one should have access to that appraisal expect for you and the lender. Sounds like they are not being truthful.
Appraisers don’t have access to other appraisals through AGDA?
Hey, Kate. Yes, they do have access if they are a member. AGDA only includes information about the physical characteristics of the property, such as square footage, bedroom and bath count, etc. It does not include what it appraised for but it does show the sales price that is recorded in public records.
Good to know!
Thank you for answering this question Tom, it is one that I have been asked several times as well.
I’m sure you have gotten this question before as it seems to be a concern of a lot of people.
It’s a good thing that private appraisals are not shared with anyone besides the client too. Thus if a property goes to the open market and sells at a different amount, there is no point of contention regarding a previous appraisal.
I hear that Ryan. I know sometimes this can happen as sellers may not agree with the value the appraiser came in at and they may price it themselves.
I love when I get an old appraisal because it makes the job so much easier 😀
Oh, no doubt Austin. When you look at it from that perspective it is a good thing. If you know how big the house is, the amenities, and the type of construction you can definitely do better at locating comps before you go out so you hopefully don’t have to make a second trip.