Enact's Blog Banner

Appraisal Trends: Mastering Property Conditions and Location on the Appraisal Review

The mortgage process involves diligence and timeliness to ensure that borrowers can meet their closing date – that diligence is also required to master the appraisal review process. Ensuring you know the ins and outs of the appraisal review is imperative to help your borrowers meet that end goal on time. Yet, you may encounter discrepancies or concerns with property conditions or location…

That’s why we’re sharing best practices to help you more effectively navigate property conditions and location on the appraisal review with tips from David Foster, Enact’s Senior Real Estate Appraiser.

Ensure clear and accurate commentary during appraisal review

As a refresher, an appraisal is a report with an independent opinion of value of how much a property is worth; typically conducted in-person with research applied to the suggestions and outcomes outlined in the report. Before reaching the review process, you’ll need to first have an understanding of what an appraiser will look for to determine the property’s value.

Once it’s time to review the appraisal report, the reviewer needs to ensure that descriptive commentary pertaining to the subject condition is clear and accurate. And when analyzing the subject property, any photos used should support the appraiser’s description. This should include photos of any recent updates/renovations that were used as adjustments and applied to the sales where the sales comparison approach is presented as support for the opinion of value.

Handling property condition concerns on the appraisal report

That said, if photos or notes outlined in the appraisal report cause concern for the reviewer, further inspection or repairs may be required. Property conditions that impact subject livability, soundness, and/or structural integrity may cause such further inspection/repairs. The appraiser is certainly qualified to comment on the property’s observed condition. However, if items are present that rise above the appraiser’s level of expertise, they would then defer to more qualified professionals to make that call.

Appraisal reviewers are empowered to request additional clarification from the appraiser if descriptive commentary doesn’t match what’s observed in the photograph addendum. They may request further support or clarification of applied adjustments from the appraiser. In the case of physical condition concerns with the subject property, the review may suggest further inspections by more qualified professionals. For example, a home inspection can be requested if concerns are found with livability, soundness, and/or structural integrity.

The appraisal report is important to ensure that homeowners are getting a fair and accurate representation of how much their property is worth. Property value impacts not only the seller, but the borrower too after all. As a hopeful homeowner, it’s important borrowers understand how these condition concerns could impact their finances down the line – help educate your borrowers during this process.

Managing questions about property location on the appraisal report

Like subject condition, location concerns and questions may arise when reviewing the appraisal report. Similar to condition reviews, aerial mapping is a method that should be used to identify any potential external influence (or the entities/structures near a property that may negatively affect its value). In a situation where the appraisal states there is no external influence or adverse site conditions, but the subject street photos or aerial mapping show potential external influence, these discrepancies would need to be addressed.

Additionally, non-residential properties that are adjacent to or near the subject can also impact value/marketability. For this reason, if the review identifies potential concerns with location that are not directly addressed, the appraiser may be requested to provide additional clarification. They would then need to directly address the impact to value with the appraiser. With more housing demands in today’s market adding to appraisal concerns, it’s best to check back in with the appraiser to get clarification. Accuracy is key, as property value is at stake for sellers and borrowers alike!

Best practices recap for the appraisal reviewer

As the appraisal reviewer, it’s your job to ensure that the appraisal report is accurate, clear, and any concerns found are addressed. You should be made aware of any concerns found in the report narrative, photos provided, and aerial mapping. If your review finds discrepancies between the comments made by the appraiser and the photos/maps provided, you may request additional information, clarification, and/or support from the appraiser. Regarding concerns with condition, remember that you can decide to defer to further inspections to ensure improvements are suitable for occupancy.

However you approach appraisal report reviews, be sure to use your best judgment and be detail oriented and triple check your work and the appraiser’s. Your borrowers and the other parties who participate in the mortgage process will thank you!

More ways we can help

We offer underwriting services, along with training resources, to help you understand the nuances of navigating the appraisal review. Be prepared and stay proactive to help your borrowers navigate the mortgage process more effectively.

And what better way to test your appraisal knowledge than to attend a training webinar? Have your NMLS ID handy and register today for our upcoming “Are you Smarter than an Appraiser?” series session on March 4th, 2024 at 12PM EST. You won’t want to miss it!

Be sure to make the most of your MI experience too. If you need some extra insight, you can always contact your Enact Sales Rep for more info. They’ll be happy to help you meet your business needs, answer questions, and point you in the right direction.


Source: David Foster is a Senior Real Estate Appraiser at Enact Mortgage Insurance.

The statements in this article are solely the opinions of David Foster and do not necessarily reflect the views of Enact or its management.


Never miss a post by subscribing to the Enact MI Blog! We’ll send you our most up-to-date topics right into your inbox.


0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *