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smobeer, Home Buyer in Jersey City, NJ

Can anyone tell me why did my lender requested a 2nd appraisal for a home I am buying.?

Asked by smobeer, Jersey City, NJ Mon Jun 18, 2012

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Mary Petti-ABR,SFR, Relocation’s answer
smobeer

Are you buying a short sale? If the house ws appraised over 6 months ago, the bank will need a current appraisal for your offer.

If you are using FHA loan, there is sometimes a second appraisal done, in addition to the one your lender orders.
1 vote Thank Flag Link Tue Jun 19, 2012
The following is one reason a lender might request a second appraisal. It may be for entirely different reasons...

Lenders use AVM's - Automated Valuation Methods - a mathematical computation to estimate the value of a property. AVMs can be widely erroneous, and lenders know this. When an AVM and an onsite appraised value differ greatly, a second appraisal may be requested. It is not an automatic assumption that the onsite appraisal was incorrect. The two simply had a difference exceeding the lender's tolerance. The solution is to seek another appraisal and compare.

My example above is only one possibility. There may be several others.

The request is not an automatic 'problem' - so don't worry needlessly. While it can be discomforting, don't over alarm yourself. They will let you know if there is a concern. Until then, proceed optimistically.
1 vote Thank Flag Link Mon Jun 18, 2012
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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smobeer,
This isn't personal and it's not uncommon. Lenders are being very cautious about which loans they approve and are watchful for errors by all involved. Appraisals are an "opinion" of value and not a scientific certainty. Two different appraisers may come to two different opinions and often do.
It's likely that there is something about the first appraisal that they were uncomfortable with and want a second opinion.
1 vote Thank Flag Link Mon Jun 18, 2012
Your best avenue for the most accurate information is to consult with your lender. They ordered the second appraisal and therefore would know the reason(s). Anything offered by trulia resources would be pure speculation.

Bill
0 votes Thank Flag Link Tue Jan 21, 2014
If the time between the last transfer date and the date of the purchase contract are within 91 to 180 days and the appraised value is more than 100% of the previous value, then a full 2nd appraisal is required. This is very common on FHA loans
0 votes Thank Flag Link Tue Jan 21, 2014
Why don't you ask your lender? Could be a number of reasons. Ask your loan officer and I'm sure he can find out.
0 votes Thank Flag Link Wed Jun 20, 2012
I'm on my iPhone so I can't search but I'm pretty sure a flip transaction wasn't in anyone's lists from what I saw in the previous posts. That's the only situation in the last three years other than a super jumbo where a second FULL appraisal was required, in any transaction I've been apart of at least.
0 votes Thank Flag Link Tue Jun 19, 2012
You are correct!! Just learned that seller owned the home for 1month when contract was signed. Shouldn't my realtor have told me about this before signing?
Flag Tue Jun 19, 2012
Second appraisals can be ordered for a variety of reasons. If you are not being asked to pay for it, I wouldn't worry about it. Here ar a couple of reasons:

(1) The appraiser that was used did not do a good job or was black listd by the particular lender. This means that the lender may not be acceptable to the lender with whom you made your application. The appraiser may have been approved at the time the appraisal was ordered but was taken off the bank's list of approved appraisers for some reason. The reason could be totally unrelated to your loan.

(2) You applied with a mortgage broker who must "shop" your loan in order to get it approved. Or, the mortgage broker wants to change lenders for another reason and the first appraisal cannot be assigned to the new lender.

(3) You changed mortgage programs and the program you changed to required a different underwriter and a different appraisal.

(4) The underwriter was unhappy with the appraisal, the comparables used or something with the first appraisal that was wrong. The appraisal failed the computerized evaluation and caused concern in the mind of the underwriter.

(5) The property is valued at an amount that requires a second appraisal. I have seen this on expensive home sales, sometimes multi-family houses.

(6) There was a material change in your qualifications and you are purchasing a multi-family home and using rental income for qualification purposes.

(7) Some other reason that I do not know. Lenders always come up with something new.

If you are concerned, speak to your loan officer and/or the lender directly. They should tell you what is going on and whether you ought to be concerned. You can always run the entire process by your attorney who could possibly give you more advice and guidance.
0 votes Thank Flag Link Mon Jun 18, 2012
I'm not sure if you are going for a FHA loan, but from my experience a second appraisal is common with FHA loans. The appraisals tend to be more conservative and can be questionable to mortgage underwriters if the AVM is way off.

Hopefully a licensed appraiser will chime in with other explanations. Sometimes the reason for a second appraisal are not disclosed to the buyer at all.
0 votes Thank Flag Link Mon Jun 18, 2012
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