Value acceptance: sometimes no appraisal
For some loans, the automated system may accept the value without a traditional appraisal. Sometimes it pairs that with a simpler property data collection, where someone records the home's condition and features without a full valuation. It can save time and a few hundred dollars. It's offered case by case, more often with larger down payments, and isn't available on every property.
Condition ratings
Appraisers rate condition from C1, like new, to C6, serious damage. Most homes land at C3 or C4. A C5 or C6 rating, or issues affecting safety or structural soundness, usually means repairs before closing. Conventional is generally less strict than FHA and VA on minor items like peeling paint, but major problems still matter.
Florida issues
Older roofs and insurance are the biggest hurdles. Insurers often require four point inspections on older homes. Flood zones and unpermitted additions also come up. See Florida homes that cause appraisal problems.
If the appraisal comes in low
Renegotiate with the seller.** Cover the gap** in cash.** Request a reconsideration of value**, where your lender submits better comparable sales or corrects errors. Lenders now have formal processes for these. Or** cancel** under your appraisal contingency.
Rental properties
On investment and multi unit properties, the appraiser also estimates market rent, which lenders use to help you qualify. A low rent estimate can affect approval as much as a low value.
Repairs
Required repairs are usually completed before closing and confirmed by the appraiser. Some lenders allow escrow holdbacks for work that can't be done right away. For bigger projects, consider a renovation loan.
From my own deals
On my own purchases, I always get insurance quotes and look hard at the roof before the inspection period ends. In Florida, the insurer is often stricter than the appraiser.
Compare
See FHA, VA and USDA appraisal rules.
A reconsideration that worked
Kevin's appraisal came in $15,000 under contract. His agent found two recent sales the appraiser had missed, closer and more similar. The lender submitted a reconsideration of value, the appraiser raised the value, and Kevin closed without renegotiating.
Frequently asked questions
Do conventional loans always need an appraisal?
No. Some qualify for value acceptance.
Is a conventional appraisal stricter than FHA?
Generally less strict on minor condition items.
What if the appraisal is low?
Renegotiate, cover the gap, request a reconsideration of value or cancel under your contingency.
Does the appraiser estimate rent on rentals?
Yes, and lenders use it to help you qualify.