As a Realtor, I am often asked many of the same questions over and over by potential buyers. One question that gets asked frequently concerns appraisals.
Q: I have an executed contract on a property and the lender is requiring an appraisal. Does the appraiser know what the contract price is? Wouldn't that knowledge influence the amount the property appraises for?
A: Per FNMA (Federal National Mortgage Association, commonly known as Fannie Mae), appraisers are required to review the contract and comment on it. Otherwise no, the appraiser is not required to see the contract. It is at the discretion of the client.
In the past appraisers were not required to receive a copy of the contract, but with all of the new regulation, now they are. FNMA has updated appraisal forms and appraisers are required to put the contract price, type of transaction (short sale, REO, etc), executed date, and then make a comment about their findings.
Just because appraisers know the contract price does not mean they will over value the property for the deal to go through. It is not uncommon for the appraisal to come in under contract price.
One appraiser I spoke with, Erin Arnett with Appraisal Certified Services Inc., has told me that she is doing a lot more appraisals for potential buyers to make sure they are not paying too much. She has even started doing abbreviated appraisals for a reduced fee. This restricted use appraisal average between $200 to $250 for a standard property. Naturally, the more difficult the property, the higher the price.
If you would like more information, you can contact Erin Arnett by calling 305-481-0367 or email her at firstname.lastname@example.org.