Back in 2012, we wrote an article discussing the FHA appraisal process, and whether it’s possible to get a refund from an appraiser if a property is not approved for an FHA mortgage or when the home’s appraised value comes back different than expected.
When we addressed this question, which we are asked from time to time, the going advice was that in cases where a buyer disagrees with the outcome of the appraisal, the fee must still be paid. What’s the reality in 2022?
When you find a house you want to buy with an FHA home loan, there must be an appraisal. This process is non-negotiable; the appraisal helps to determine the FHA loan amount which is based on the fair market value of the home, not necessarily the asking price set by the seller of the property.
What do you need to know about this process? If an appraisal assigns a fair market value lower than the asking price of the property, some buyers may not be sure whether to walk away from the loan (you can do so without penalty on an FHA mortgage in these cases) or try to renegotiate with the seller.
Some borrowers walk away from the property, not liking the terms or the price, or both. In such cases, as we noted back in 2012, one of the questions these house hunters ask when walking away from the transaction is whether there is a refund possible for the appraisal.
It’s not surprising that a buyer would ask as appraisals cost hundreds of dollars. Who wouldn’t want a refund when choosing not to buy after all?
When the appraised value of the home is lower than the asking price, you are due a refund of any earnest money paid upfront if you choose not to purchase the home. Is it logical to expect a refund on the appraisal as well?
Unfortunately, now as back when we wrote the original article, the nature of this issue has not changed.
Appraisal fees are paid for services rendered, and the fee is not outcome based. It’s the same situation as if you had taken your car to be fixed and the mechanic tells you the car won’t last much longer. You might not like the news, but you still have to pay the mechanic for the labor and parts to get the job done.
An FHA appraiser is paid, like the mechanic, to do the appraisal work. The outcome is not guaranteed. Those who disagree with the results of an appraisal are free to appeal it, but you should know that appraisals cannot be re-accomplished simply because the buyer or seller disagrees with the value of the home.
The reason you may be approved for a re-appraisal? If there are “material deficiencies” in the original appraisal report. But a simple disagreement over the valuation of the property will not qualify.
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