The appraisal is a critical phase in the homebuying process. How can you be sure that you receive a fair valuation of your property? And what can you do if you believe you have not received a fair appraisal due to possible discrimination? Let’s walk through the process.
What is an Appraisal?
An appraisal is an independent opinion of value, performed by an appraiser for a lender in connection with a loan secured by real property. Although the consumer pays for the appraisal, it is the lender who orders the appraisal and is the appraiser’s client. As a buyer, you still receive a copy of the appraisal report.
What Impacts a Property’s Appraised Value?
The accuracy of an appraisal can be impacted by a variety of factors, including the appraiser’s familiarity with the area, the comparable property sales selected by the appraiser, information regarding the subject property and any amenities, upgrades or improvements, and information about the neighborhood.
What Role Does Your REALTOR® Play in the Appraisal?
Your REALTOR® can play an important role in making sure the appraiser has current, accurate, and relevant property information. A REALTOR® to share information about the property with the appraiser prior to the appraisal, like recent neighborhood sales; a copy of the property’s Contract of Sale; and, information about any features, improvements, or enhancements to the property. They can also meet with the appraiser at the property while the appraisal is being conducted.
However, there are some things that you and your REALTOR® cannot do: it is illegal to try to influence the appraisal process, and the borrower and REALTOR® must avoid any improper contact or communication. Your REALTOR® can guide you through this process.
What Options are Available if Appraisal Contains Mistakes?
A homeowner or borrower may contact the lender to request a Reconsideration of Value (ROV). A request for an ROV is appropriate if the appraisal contains factual or other errors or omissions, inadequate comparable properties, or if there is evidence that the appraisal was influenced by prohibited bias. Lenders must make sure that their reconsideration of value process is nondiscriminatory and available and accessible to all.
A ROV is warranted where there are deficiencies in the original appraisal or critical information is missing from the original appraisal. If the homeowner or borrower wants the appraiser to consider new information, which was not available at the time of the original appraisal, that is treated as a request for a new appraisal, rather than a request for a ROV.
What if You Believe You Have Been Subject to Appraisal Discrimination or Negligence?
Fair Housing prohibitions against discrimination extend to appraisals. Maryland law also prohibits appraiser discrimination. If you have evidence of appraiser negligence or discrimination, you should report it, in writing, to the lender. You may also file a complaint with the following organizations:
The U.S. Department of Housing and Urban Development’s “Appraisal Complaint National Hotline” at 877.739.0096 or Homepage | Hotline (asc.gov)
Consumer Financial Protection Bureau (for federally chartered lenders) Submit a complaint | Consumer Financial Protection Bureau (consumerfinance.gov)
Maryland Commissioner of Financial Regulation (for Maryland state chartered banks, credit unions or trusts) By mail, Attn: Consumer Services Unit 500 N. Calvert Street, Suite 402 Baltimore, MD 21202, by Phone at 410.230.6077, or online at Consumer Complaints – Office of the Commissioner of Financial Regulation (state.md.us)
A complaint may also be filed against an appraiser with the Maryland Commission of Real Estate Appraisers, Appraisal Management Companies, and Home Inspectors, on a form specified by the Commission: File a Complaint – Maryland Commission of Real Estate Appraisers, Appraisal Management Companies and Home Inspectors – Division of Occupational and Professional Licensing
Finally, a complaint may be filed with the Maryland Commission on Civil Rights: Pages – File A Complaint (maryland.gov)