What Do You Mean the Appraisal Isn’t Done Yet?

Your Buyer (the Borrower) has provided all the documentation requested by the mortgage originator in a timely manner, however the lender cannot close within the rate lock period (or the contract close date). The lender is now asking for an extra $1,000 (or more) to pay for a rate-lock extension. The lender says that the hold-up is being caused by the property appraisal not getting done on time, and that this unforeseen circumstance is outside of the lender’s control.

The timely production of the appraisal is, in fact, outside the control of the lender. Of course, it is also outside the control of the borrower. When a rate lock expires (or financing contingency period expires) for reasons outside the control of both a borrower and a lender, it is the borrower who typically bears the consequence of this predicament. Some lenders will not permit a borrower to lock until after the appraisal has been received; however, untimely delays in completing the appraisal may cost borrowers if otherwise favorable rates inch upward in the course of the delay.

Today, lenders are required to utilize appraisal management companies (AMCs), to hire appraisers, paying them about $200 per assignment, often less, notwithstanding that the going rate for an appraisal is about $450 and this is the amount charged to borrowers. Simple math demonstrates that less than half of the appraisal fee is finding its way to the appraiser. Consequently, the quality and timeliness of appraisals sometime suffer.

What are borrowers to do (particularly since an incomplete appraisal is not a protection afforded under the Financing contingency clause of the standard FAR/BAR contract)?

  • Borrowers should request that the appraisal be ordered as soon as possible, once application is made. The response of the lender will vary depending on the lender’s (and their wholesaler’s) policies and protocols, and the type of loan (i.e., conventional, VA, FHA, etc.)
  • Borrowers will be asked to pay the full cost of the appraisal before it is ordered, so be ready to pay the appraisal fee, up front and in full
  • Generally, the earliest an appraisal can be ordered is after the lender’s Loan Estimate (“LE”) has been prepared by the lender, delivered to the borrower and receipt acknowledged by the lender; so borrowers need to timely reply to all lender inquiries
  • More often, however, the lender will wait until all of the documentation supporting the loan application (i.e., pay stubs, bank statements, tax returns, etc.) has been collected from the borrower, and a sense of the viability of the loan determined; so timely submit all requested documentation as quickly as it can be assembled

Mindful of the potential for delays, how can a borrower assist in obtaining a Loan Commitment within the Loan Commitment Period prescribed in the Financing contingency of the Contract?  The simple answer is to timely produce any and all requested documentation, and request that the lender order the appraisal as early on in the process as possible (and be prepared to pay the appraisal fee in full up front).  Otherwise, the borrower is left to push and prod the lender (without being a nuisance, if possible), to be sure the lender’s processing department is watchful of and meeting the deadlines of the contract.

In the event the expiration of the Loan Commitment Period is approaching, it would be prudent to arrange for an Addendum to Contract extending the Financing contingency date before it expires. As always, we suggest that you contact your local real estate attorney should you have any questions regarding the financing of residential real estate.


Berlin Patten Ebling, PLLC

Article Authored by Mark Hanewich, Esq. mhanewich@berlinpatten.com

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged. 



3700 South Tamiami Trail, Suite 200, Sarasota, FL 34239   P (941) 954-9991  F (941) 954-9992 


247 Tamiami Trail South, Suite 201, Venice, FL 34285  P (941) 955-9991  F (941) 484-9992 


8130 Main Street, Suite 206, Lakewood Ranch, FL 34202   P (941) 907-9022  F (941) 907-9024

Did you find this real estate law content useful, but need actual legal counsel?

Speak to a real estate attorney!

, , , ,

Loan Approval: Which Pot of Risk Porridge is Just Right?

The Buyers discovered their dream cottage in the forest. It’s pricey and the neighbors are bears, but your Buyers are pre-approved and in this seller’s market the home will soon be under contract. As the Buyers’ realtor, you recommend that the Buyers tender an offer with a substantial earnest money escrow deposit (the “Deposit”) to demonstrate the…

FAR/BAR Changes Coming Soon – Financing Contingency Revisions Explained

We have just learned that on April 4, 2017, the FAR/BAR form contract will again be revised primarily in response to the confusion surrounding the financing contingency. Although the revised form cleans up or otherwise clarifies other provisions of the contract (we will roll out a summary of all of the changes independent of this…

Do I Really Have a Loan Commitment?

When a buyer requests a financing contingency, the standard contract requires the buyer “to use good faith and diligent effort to obtain a written loan commitment for the Financing.” There is pervasive confusion about what indeed a “Loan Commitment” looks like. Every lender approves loans in different ways, which mean it is very hard to…

Florida Property Values on the Rise and the VAB

Well, it is that time of the year again…Each August, property owners are notified by property appraisers of their current year’s assessed and market values in “truth in millage” (TRIM) notices that also show the prior and current years’ taxes, with and without budget changes. As many of you have noticed, taxable property values are…

Addressing Financing Contingencies

Under the Financing Contingency paragraph of the FloridaRealtors/FloridaBar-1 Contract and As-Is Contract (hereinafter collectively referred to as “Contract”), when can the Buyer or Seller terminate the Contract and is the deposit returned to Buyer? Prior to Loan Commitment Date, Buyer notifies Seller in writing that Buyer can’t obtain financing after using diligence and good faith,…

Bank of America is on Board

Bank of America will be participating in Obama’s Home Affordable Foreclosure Alternative program starting April 5th. The HAFA program is designed to qualify a home owner and a price for the home in advance of the contract.  The Bank of America representatives will be going through an extensive training this weekend before the launch on…

18 Month Moretorium on Home Valuation Code of Conduct

Fannie Mae and Freddie Mac implemented a new appraisal rule starting May first, written by the office of New York Attorney General Andrew Cuomo last year; however, critics of the new rule applied pressure before the July 4 congressional recess with the introduction of bipartisan legislation that would mandate an 18-month moratorium on the “Home…

New Appraisal Guidelines

On May 1st, Fannie Mae and Freddie Mac imposed a new appraisal rule, referred to as the Home Valuation Code of Conduct. It is now coming under attack from the National Association of Realtors. The article read: “The intent of the rule is to improve the accuracy of appraisals by eliminating pressure on appraisers from…