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What’s the Appraisal Impact?

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Posted On: 11/23/2011

QUESTION:

How will new appraisal rules impact real estate?

ANSWER:

Appraisers say the new “Uniform Appraisal Dataset” rules will require additional time and paperwork and the result will be increased costs.

They’re also concerned that the new rules will generate more data – and that more data in the hands of lenders will ultimately lead to more automated appraisals and less need for human appraisers. Like professionals in many fields, they worry that the new age of electronics will result in fewer jobs and less pay.

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Alternatively, Fannie Mae says the new system will “provide lenders with greater confidence in loan quality by offering enhanced appraisal data quality and integrity.” In short, more uniformity will make it easier to compare appraisals and avoid errors and fraud.

For homebuyers, an appraisal should be seen as a consumer protection in the sense that lenders traditionally make loans based on the sale price of the property or the appraised value – whichever is less. This approach is purposely designed to also reduce lender risk and limit what can be called “over-lending.”

For additional information, speak with your lender and ask what type of appraisal will be conducted, whether it will be automated or not and what cost you can expect to pay.

QUESTION:

What’s the difference between “sold” and “under contract?”

ANSWER:

When a home is “under contract” it means the owner and broker are giving notice that an offer for the property has been accepted. However, the fact that an offer has been accepted does not mean there’s a done deal – the offer could fall through because of a lack of financing, an inspection failure, etc. If you like the property you may want to submit a backup offer in case the first one is derailed.

With a “sale” sign the property has gone to closing, papers have been signed, checks have been written and the keys have been handed over. The property has a new owner.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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