Real Estate Appraisal Rules Change Again

February 12, 2015 by · Leave a Comment 

On January 26, 2015 new appraisal rules went into effect that will likely delay residential real estate closings. The new FNMA/FLMC required appraisal review system called “Collateral Underwriting” (CU) is an automated system where appraisers must submit their appraisals for review. For the past 5 years, lenders have had to upload the appraisals to this database. Now, each appraisal submitted will be rated according to the stored data.

The comparable properties used to determine the subject property’s value will be compared to those stored in the database. Then the automated appraisal evaluation system will score the appraisal from 1-5, 1 being the best score, 5 being the worst. The automated system is designed to further justify or determine the value of the comparables used in the appraisal. Both the appraisal and the appraiser are rated on this scale.

What does that mean for consumers? Appraisers are likely going to spend more time gathering their comparable properties for each appraisal. Unique properties, those with unique characteristics that add value for a buyer but are hard to “comp”, may suffer in the process because comparable properties could be hard or impossible to find. The cost of the appraisal might also rise because of the additional time the appraiser invests in the process. Lenders who receive an appraisal with a high score, may reject the loan or require the borrower to come up with additional down payment money.

Because of these new rules, our preferred lenders say that we should plan on additional time for them to process loans. What was taking a week or two for the appraisal process, is now taking longer, more than two weeks.

Lots of other things can affect the time from contract to closing. The lender makes a big difference. Our recommended lenders have in-house processing and underwriting, and they rely on an approved list of appraisers that are vetted for their knowledge and competency in the Austin market.  We are happy to provide you with a list of these lenders.

For more information on the Austin real estate market or how these new rules may affect you specifically, contact Laura Duggan, Gail Boston or Katy Freshour at West Austin Properties, 512-750-2425 or visit our website at

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