Are Home Appraisal Fees Refundable?
There are cases where the process of buying a home reaches a full stop, and the first question home buyers ask is: Can I get the home appraisal fee back? Is my appraisal fee refundable? In this short review we will try and cover the main issues concerning appraisal fee refunds.
Home appraisal costs are quite a large sum of money, especially when it has to be paid up front, this means that a home buyer needs to pay the appraisal fees before the mortgage closing.
Appraisal Fees Are Paid to The Appraiser
Just to clarify things it is important to say that the appraisal fees and costs are not part of the lenders profit sources. The fees and costs are paid to the appraiser or appraisal management company directly, and they are paid in exchange for the appraisers professional report.
If the appraisal report was delivered on time and a professional appraisal job was done, then the appraiser deserves to get his fee, and it has nothing to do with the way the home buying deal was closed or not.
Appraisal Fees Are Nonrefundable
If there are problems with the real estate deal because of which the deal is canceled the appraisal fees are NOT refundable. This means you need to make sure that the process of the home buying is done properly, otherwise you may keep losing the appraiser fees every-time.
Here are some guidelines for you to follow and tips to think about concerning the home appraisal. These guidelines may help you save money and avoid the awkward position where the fees are paid and the money has been wasted.
Do a Prior Home Inspection
In some cases where you have seen the home you are planning to buy and see that there may be some home improvements which will need the sellers attention and financial investment, request that the home inspection will be done prior to the home appraisal.
You can read the article on how to if the find seller is lying by body language, and make sure they are not hiding anything worth knowing.
Home inspection can cost even $500, the inspector will cover all the main house factors to see that the home is livable. You can read more about what FHA appraisal inspection looks at. The inspection report might come up with some serious home improvements (roof leaks, basement flooding, heating or cooling malfunctions) that need to be done, otherwise the home is not safe or ready for residence.
Occasionally the seller disapproves with the inspection and does not want to invest the needed budget and the deal will be concealed. Postponing the home appraisal until the inspection results arrive might save the unnecessary appraisal fees.
A Low Appraisal Is Not A Cause For Refund
If the appraisal report came too low, the lender will not lend you the sellers house price. Lenders would give a mortgage loan only as high as the value of the appraisal report. Since the appraiser fees are non refundable, an appraisal too low or far from the sellers home price may cause the deal to fall apart.
What you can do is make sure you and your real estate agent help the appraiser with comps (at least 3 comparable homes, sold in the last 3 month, within 1 mile from the current sellers location). These comps might help the appraiser from under estimating the current home. If you find yourself that the appraisal comps are too low, you should approach the seller with these facts before the appraisal is done.
In some cases where the seller believes his house is worth what they are asking for, even after they see your comps, your real estate agent may ask them to be ready to pay for the appraisal if it comes lower than a specific sum. Then if the appraisal does come out too low, you will not have to look for refund, since the seller would have to pay as they agreed.
Appraisals Are Biased And Flexible
An appraisal is not a science, it is based upon the appraiser knowledge and experience. In some cases the appraiser comes from a different town, and is unfamiliar with the community or towns subliminal issues. In other cases they did not discover a few comp deals or did not understand why some homes where sold short.
A different appraiser may estimate the property value higher by comparing different deals or calculating different factors or giving different weight to known factors. If you have already invested in the home inspection, you might want to call for another appraisal report.
This should be done with your lender since the lender may disapprove of another appraiser report. If you have the reasons to believe the appraiser report was too low and does not accurately estimates the home’s value, ask the the lender to approve another appraisal report. (You may request the seller to pay the second appraiser, otherwise there is no deal..)
If The Lenders Declines Your Mortgage
In many cases especially today after the 2009 crisis, lenders risk managements decline mortgage applications even though the pre-approval process seemed fine. This happens when new information is revealed and new issues concerning negative credit score items are received which cause the lender to pull back from lending the loan.
If this happens to you, you need to request the appraisal report! Since you have paid for it, you are entitled to get a copy of it. Then you should find a different lender and start the process over again with the new lender. Since the problem was not under estimated value for the property, the lender might allow you to use the appraisal report you already have. So you will not have to do another appraisal, and there is no need for a refund.
Appraisal Fees Refund Conclusion
Appraisal fees are not refundable. They are paid up front, this helps preventing instances the buyer will refuse to pay the appraisal fees if loan application is declined. The appraisal is paid to the appraiser, and once the appraisal report is submitted to the lender, the appraiser job is done, and they are ought to be compensated for their job, regardless of the mortgage approval.
The best advise is to calculate and preplanned your steps so you do not reach a point where you loose your appraisal fees, since there will be no refund.
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Check These Posts On Relevant Topics:
- What FHA House Inspection Includes
- What To DO To Prevent a Low Appraisal
- Home Appraisal Fees & Costs Examples