As of November 2022, mortgage rates have doubled since the beginning of the year, and…
The California home appraisal process has changed a lot since the pandemic began. We’ve got some good news for home buyers who are going through the process of getting a loan right now, because there’s a good chance that your appraisal will be a little bit easier. Here’s what we mean.
California Home Appraisal Waivers are Streamlining the Loan Process
Changes to the appraisal process are making it more streamlined. In many instances, lenders are issuing appraisal waivers (meaning that no appraisal is required) for purchases or refinances.
Why do we think this is happening? Well, data collection! Over the last few years, the real estate market has been really hot. During that time, a LOT of appraisal data on homes has been collected.
An appraisal waiver is issued when a lender has enough data about your neighborhood that they can put a value on your home without even seeing it. It’s a science. They use computer algorithms and information from previous appraisals in your area to make the calculation.
It’s our theory that if a lender has enough information and data on a neighborhood that they feel comfortable that the value they have for a property is accurate, they are willing to issue an appraisal waiver, a desktop appraisal (with no home entry), or a drive-by appraisal.
What is a Desktop Appraisal and a Drive-By Appraisal?
A desktop appraisal means that the lender does an actual appraisal. It’s done with only the info at his or her desk. Information about the property’s characteristics is researched using public records and other available sources, including the MLS and information provided by the property owner.
Another option is a drive-by appraisal, where the appraiser does an exterior inspection only—no interior appraisal is done at all.
Both of these options are quicker and more efficient than traditional full appraisals, and during a pandemic, they protect both you and the appraiser.
Advantages of California Home Appraisal Waivers
If you’re lucky enough to get an appraisal waiver for your loan, it’s time to celebrate. That’s because you don’t have to get an appraisal at all, saving you both time and money. During the pandemic, appraisals have become a huge bottleneck for getting homes closed, so an appraisal waiver can really help you out.
For our closed loans from June to now, 65% had waivers! For our loans currently in process, the number is the same—65%. So, you have pretty decent chances of getting an appraisal waiver on your loan.
Do Streamlined Appraisals Protect the Buyer?
Well, it’s important understand the pros and the cons of appraisal waivers.
It’s possible that, if the lender’s data about the value of your home is incorrect, you could end up owing more than the home is worth. You can’t hold the lender liable if you get an appraisal waiver and that ends up being the case.
However, appraisal waivers are based on a strict system of information and are very accurate. And unless your property’s value has substantially declined since you purchased it (definitely not happening in our area), you don’t have to worry about this at all when refinancing.
If you want to be 100% sure that your home is worth a certain amount, you can still opt to pay for an appraisal for complete peace of mind.
We’re excited about some of the changes we’re seeing to the appraisal process. Any time technology can make the loan process quicker and easier (while also staying accurate), we’re on board!
If you’re ready to apply for a home loan, just go here to get started!