How long does an appraisal take?

The physical inspection of the real property being appraised can take from approximately fifteen minutes to several hours, depending upon the size and complexity involved.

After the initial inspection of the property the appraiser spends time touring through the neighborhood or area. The purpose of this tour is to search for comparable sales (other properties that are similar to the property being appraised) that have sold within the last six months to a year or so. When the field work is finished, the appraiser completes the report at his office. The report can consist of a short form report (typically under ten pages) to a long narrative report which can sometimes exceed a hundred pages. A short form report usually takes between three to six hours to complete. A narrative report can take weeks or sometimes even months, depending upon the complexity of the assignment.

How the New Home Appraisal Rules Can Hurt You

Beginning February 15, 2010, mortgage brokers can no longer order their own appraisals for residential real estate loans backed by the Federal Housing Authority. Instead, the appraisal selection process will be in the hands of appraisal management companies.

The idea behind the creation of the new law is to remove bias from the process. Previously, loan officers and other representatives form loan companies could order their own appraisals. As a result of greed, there have been cases where the real estate appraisers have inflated values of real estate on appraisals as not doing so may have impacted getting future business from that same loan officer/loan company. In theory, the idea was sound.

In practice, the idea is flawed. The major problems are twofold.

First, the appraisal management companies tend to be regional or national companies. They do not think locally. As a result they do not hire appraisers based on their local knowledge or expertise. Rather, they hire who’s cheapest. Appraisal management companies make their money by the spread between what they pay the appraiser and that they charge the lender. The cheaper the appraiser, the more profitable it is for the appraisal management company. As such, the use of non-local or inexperienced appraisers is becoming more common.

Secondly, the timeliness of the appraisers turn around time is becoming extended. It is taking more time to process mortgage loans as a result.

By Real Estate Finance

New Home Appraisal Rules Prompt Backlash

Real Estate Industry Say New Rules Are Hurting the Housing Market

Less than three months after new rules for home appraisers kicked in, the real estate industry is in uproar.

Realtors, homebuilders, mortgage brokers and the appraisal industry itself all agree the rules are causing problems. Some are backing a bill in Congress to kill them.

The new guidelines essentially put a firewall between lenders and home appraisers. They also ended the practice of lenders using their in-house staff for initial home appraisals and prohibit the use of appraisal-management companies owned or controlled by lenders.

But since they went into effect May 1, 2009, the rules have created a slew of unintended consequences that critics say are causing delays in closing sales, or undermining sales because botched appraisals are coming in too low.

"This thing is not only preventing the housing market from recovering, it's destroying the housing market," said Marc Savitt, president of the National Association of Mortgage Brokers. "We're eliminating competition, and we all know what happens when you eliminate competition: Prices go up."

After a homebuyer and seller agree on a price, the buyer applies for a mortgage. The lender then orders an appraisal to ensure the value of the property, because if the borrower defaults the property will be sold to satisfy the debt. The appraisal fee, which can run between $250 and $500, is usually paid by the buyer.

The rules, dubbed the Home Valuation Code of Conduct, are meant to eliminate conflicts of interest that created pressure on real estate appraisers to inflate the value of a property. Lenders, agents and brokers have been known to pressure appraisers to "hit the number" that the homebuyer and seller agreed on so the deal would close and everyone could collect their fees. Inflated appraisals were partly blamed for fueling the housing bubble.

But under a settlement last year with New York Attorney General Andrew Cuomo, Fannie Mae and Freddie Mac agreed only to buy loans from lenders that don't directly hire appraisers. The move sent shock waves through the industry because Fannie Mae and Freddie Mac own or guarantee about half of all U.S. home loans.

So lenders started giving more business to appraisal management companies, which critics say draw appraisers from a pool of candidates willing to do the job for less money and who, in some cases, may be unfamiliar with a neighborhood.

by CBSNews.com