Three Nasty Surprises that Can Delay a Mortgage Closing

Surprises can be good or bad. Surprise parties, an unexpected bonus at work, a wink from a secret admirer – those are all good surprises. A fender bender, a broken heirloom or the need for a root canal? Bad surprises all.  

And I’ve learned that surprises in the home buying business are almost always unwelcome. Most mortgage surprises involve a last-minute event that threatens to delay or halt the closing. Those delays can cost both lenders and home buyers money, and can cause ill will and even lost business from borrowers.  

Through our years in the business, we’ve witnessed a few appraisal-related surprises that can delay or stop closings. The sad part is, almost all bad surprises involving appraisals can be avoided. Here, I give some advice to mortgage lenders.

Nasty Surprise No. 1:  Where’s the report?

You’ve been working with anxious first-time buyers and their real estate agent, promising them their mortgage will go through in time for the home sale to close. Now the buyer’s rate lock is about to expire and you get a call from the appraiser that his report will be two weeks late because “he’s been slammed.” Everyone’s upset and the agent is threatening to never do business with you again.

How can this be avoided? The key is to find an appraiser who is familiar with the area and not overloaded with work. If you’ve experienced a late report, chances are the appraisal partner you work with doesn’t help manage the workloads of its appraisers. At the very least, you should be kept informed so if something happens beyond anyone’s control, you can take necessary action.

Nasty Surprise No. 2:  Your underwriter is shaking their head.

Suppose you were able to calm down the borrower and real estate agent and the appraisal report is delivered, albeit two weeks late. The buyer is packed and the seller has all but moved out of the home. Everything looks great—but then you get a call from your underwriting department. Surprise! The comps used in the appraisal report aren’t “similar enough,” so they are rejecting the appraisal. Now you need to go back to the agent and borrower and tell them that the mortgage is delayed once again.

Believe it or not, the above scenario doesn’t happen to everybody. Some appraisal companies actually double and triple check reports for completeness and accuracy and send reports through the most up-to-date software to make sure it’s compliant with all national and regional regulations. They also employ appraisal experts to look at final reports to ensure the report’s quality. Lenders with this kind of appraisal help spend less time on compliance and quality control issues and more time originating loans.

Nasty Surprise No. 3: The appraisal doesn’t support the sales price.

We’re all familiar with an appraisal that comes in lower than the contract price.  Especially in a rising market, home prices are rising faster than comparable closed sales and the closed sales don’t always support the current market prices. Usually the only way to make the deal work is for the borrower to come up with more money or for the seller to agree to accept a lower price. 

 Do these surprises sound familiar? Give us a call a 1-800-948-2121 or email [email protected] today and let us get rid of them for you! Give us a try and you’ll find your appraisals going much more smoothly, with accurate reports delivered on time.

Visit Us at Nadlan Valuation