This week I have had a couple of sellers 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. The sellers also wanted to know if other appraisers had access to past appraisals.
These questions are valid, and the concerns are reasonable, as sometimes appraisals do not meet the sales price that buyers are willing to pay, and sellers are willing to receive. Majority of the time, experienced appraisers that are knowledgeable about the area are going to be accurate because their value is provided without bias as a disinterested third party.
FHA and VA Appraisals
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, and the case number follows the property.
For example, a home is under contract and an appraisal is completed, but the loan falls thru because the appraisal was less than the sales price of the contract.
If a subsequent buyer writes a contract at the same or higher price than the previous appraisal, then there could be problems with this deal because FHA Appraisals are typically valid for up to 120 days and VA appraisals are valid for 6 months.
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 completed and when the case number was issued.
Conventional loans are different because there is no case number or “attachment” of the appraisal to the property. With a conventional loan, the lender orders and receives the appraisal. The appraisal is held by that lender. If another buyer applies with the same lender within 30 days of the appraisal, there may be some overlap, but odds are slim and most lenders will order a new appraisal.
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 receive a copy of the appraisal you should request one from the lender.
Who Sees the Appraisal
With a low appraisal, the seller’s primary concern is whether a second appraiser might have access to the first appraisal that was completed 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 the appraisal and who they share it with. Future appraisers of a conventional loan will not have access to the previous appraisal unless it is provided by the party that ordered the first appraisal.
As you can see, with regard to whether an appraisal stays with a property it will depend on what type of financing is being utilized. 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 provided to them.
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.