Appraisal Review, Desk Review or Field Review: Why Your Lender Wants a Second Look

Most buyers think of the appraisal as one number on one report. Usually it is. But sometimes a loan needs more than one opinion of value, and when those opinions don't match, the closing can stall while everyone waits.

Recently one of our files had four: a first appraisal, a second appraisal that came in about a third higher, a desk review and a field review. All four landed on different values. Here's what each of those reviews is, why a lender orders them, and what you can do about the delay.

Why one house can have more than one value

An appraisal is a licensed appraiser's opinion of what a home is worth, based on the property and recent comparable sales. Two careful appraisers can choose different comparables, adjust for features differently and land on different numbers. That's normal. It only becomes a problem when the loan needs more than one of them.

When lenders order a second look

A second valuation is more common when:

• The loan is large. Many jumbo and non-agency programs require two full appraisals or a separate review above a certain loan amount.
• The loan is being sold to an investor whose rules call for an extra check before they buy it.
• The first report raises questions, such as comparables that are far away or old, or a value well above the contract price.
• The property is unusual, with few true comparables nearby.

The types of review, in plain English

• Second full appraisal. A different appraiser visits the home and writes a complete new report.
• Desk review. An appraiser reviews the original report from a desk, without visiting, and either supports the value or gives a different one. You may see it called a collateral desk analysis.
• Field review. An appraiser reviews the original report and also looks at the property and the comparables in person, usually from the outside.

Each one is another professional opinion, and each one takes time to order, complete and review.

What happens when the values disagree

The highest number doesn't automatically win. The lender or investor's guidelines decide which value is used, and many programs use the lower value or the reviewed value. If the value used is below the contract price, the loan amount, down payment or price may need to change.

How to keep it from derailing your closing

1. Ask at application whether your loan will need a second valuation. If it might, build extra time into your contract.
2. Ask who ordered each review and why. Your loan officer should be able to tell you.
3. Ask what happens if the values disagree, before the reports come back, not after.
4. Expect updates even when nothing has changed. Waiting is easier when you know where things stand.

The takeaway

An appraisal is an opinion, not a measurement. When a loan needs more than one opinion, the time between them is where buyers get nervous. Knowing why each review was ordered, and what happens if they disagree, keeps a slow week from turning into a lost house.

If you're buying in Connecticut and want a straight answer on what your loan will need, the team at AFC Mortgage Group can walk you through it. Learn more at afcmortgagegroup.net.