We have been relocated and are buying a house during the coronavirus outbreak. My lender tells me that we don't need a full appraisal. Isn't this unusual?
Yes, this extraordinary situation is true — for now.
The Federal Reserve issued a temporary rule in mid-April allowing banks to put off getting an appraisal for 120 days following the close of residential and commercial real estate financial transactions. The rule is meant to allow quick access to credit.
Housing-related agencies have agreed that appraisers, who are part of the critical work force, need only do exterior or desktop appraisals to close a loan. So, for the 120-day interim appraisals will be done, but not as they were before.
This rule is temporary and is intended to move along housing loans without any snags, freeing up liquidity in the market.
The rule does not apply to real estate development or construction.
Some of the snags in housing sales during the coronavirus crisis have occurred because of social distancing and quarantine rules. Appraisers themselves have been reluctant to expose themselves to a possible virus situation. This rule will give them some relief.
While positive for consumers, who can quickly do home sales, there are some concerns for the housing market generally. Appraisers make sure the consumer borrows a reasonable amount on a home and this is important information for both the buyer and the lender.
Some lenders fear the rule will open the door to lower-than-expected appraisals or even predatory lending. In addition, the value of a property could change by the end of the 120-day grace period.
