A review appraisal is an appraisal sometimes used in the mortgage industry to verify the value of property. Of course, mortgage appraisals are already commonplace, as lenders need to determine whether a home is sufficient collateral for the loan they are preparing to give. If a house is appraised at a considerably lower value than the loan or the buyer’s agreed-upon purchase price, the lender might choose not to approve the mortgage loan.
The Value of a Second Opinion
Sometimes, a lender will want a second opinion about the value of a home. Since the appraisal is a crucial due diligence step to prevent the lender from taking on excessive risk, the lender may choose to scrutinize the mortgage loan further. A review appraisal serves a quality control function in this kind of situation. Primarily, a second appraiser is brought in to review the work of the first and make sure their opinion of value is accurate. If the review appraisal can verify and back up the work of the original appraiser, the lender will feel more comfortable about proceeding with the loan.
Desk Review vs. Field Review: What’s the Difference
There are two types of review appraisals: desk review and field review.
In a desk review, a reviewer goes through the original mortgage appraisal documents and checks the work of the original appraiser. What the reviewer does not do is inspect the subject property. In a way, then, a desk review is essentially half an appraisal. The reviewer doesn’t collect any firsthand knowledge of the property. Instead, he or she goes through the calculations and sales comps of the original appraiser and looks for errors or miscalculations.
A field review is the more in-depth version of the review appraisal. In a field review, the reviewer not only checks the work of the original appraiser but also conducts an independent exterior examination of the subject property. By adding this extra step to the review process, the appraiser can formulate an opinion of the property independently, and not just based on secondhand data and knowledge. This person is then more qualified to formulate their own opinion of value on the property, which means a field review is closer to a second opinion than a simple check. Field reviews are more in-depth in their analysis as well.
Which type of review appraisal a lender chooses will depend on how thorough they want the appraisal review to be. A field review will always be more detailed—and therefore more likely to arrive at a different opinion of value than outlined in the original appraisal. Of course, field reviews are also more expensive than desk reviews, due to their increased scope of work.
At Authority Appraisals, we offer review appraisals, including both desk reviews and field reviews. For lenders, either type of review appraisal is a smart way to verify appraisal accuracy and minimize risk. more information please Contact Us, if you are ready to get started please complete our Order an Appraisal form and we will be in touch with you a free appraisal quote.