The world of real estate can be tricky. The value of a property can fluctuate a lot, depending on many factors. If a buyer knows very little about what factors can impact the value of real estate, then they likely won't know if a seller is asking too much.
The good news is mortgage lenders use an appraiser to assess the value of the property before extending a mortgage loan to a buyer. However, with more and more lenders coming under fire for granting mortgage loans that just aren't worth the price being paid, they need to do something to further protect themselves. One such way is to get a desktop appraisal review--basically a second opinion on the original appraisal value. Here are three reasons to get a desktop appraisal review before approving a mortgage for your client.
1. It provides more safeguards for lenders and borrowers alike.
While you, as the lender, should be concerned with how an overvalued mortgage affects your company, you also need to be concerned with how it affects your borrower. If you only use one appraisal before granting a mortgage, then you could end up losing a lot of money. Not only because the property was simply overvalued in the original appraisal, but also because the borrower could end up defaulting on the mortgage if they find out the property isn't worth what they paid for it.
A desktop appraisal review will look at the original appraisal and determine if there are issues that lower the value of the property. Perhaps there are surrounding properties that are not well maintained or the neighborhood has a higher crime rate-- both would likely lower the value of the property considerably. Having this appraisal review could not only save you, the lender, from loaning out more money than you should for the property, but it can also help the buyer negotiate a lower price with the seller - which translates to a lower mortgage payment for them.
2. It can be a relatively quick process.
Even though the desktop appraisal review is meant to further investigate the original appraisal, it can usually be completed rather quickly. Also, as long as you request the desktop appraisal review early on in the loan process, it will be less likely to affect the closing date for your customer. However, if you request one right before the closing date that had previously been set for your customer, you will probably see a delay in closing.
3. It can help you determine the ability of your current appraiser.
If you regularly require desktop appraisal reviews and you see major discrepancies more often than not, then it can call your appraiser's ability into question. As a lender, you need to have confidence in your appraiser. However, if they consistently overvalue properties, then they aren't doing their job correctly. This costs your company money and can damage your reputation as a lender. Unfortunately, it is something that can go on undetected for a long time if you only use desktop appraisal reviews sparingly.Share