Getting a home appraisal is an integral part of the reverse mortgage process.  Here’s what you need to know to manage your expectations about getting your home appraised as part of this loan to help you age in place.

It’s a multi-step process, but you can prepare in advance to make it as smooth as possible.

Typically, there will be three steps:

  1. The inspection.  During the inspection, the appraiser will walk through the home with you and take any necessary photos as part of the research process.  They will focus on any areas that may be in need of repair, as well as specific features of the home that could contribute to—or take away from—its value.
  2. The research.  Armed with photos and notes on your home, the appraiser will conduct their research to determine comparable home sales in your area.
  3. The appraisal.  After tallying comparable sales and the complete picture of your home, the appraiser will deliver their appraisal to you and your reverse mortgage lender.  On the final appraisal, you will see all of the data used in determining the value of your home.

Once the appraisal is in hand, the lender can determine the amount you will be eligible to receive from your reverse mortgage loan.

ARLO explains the reverse mortgage appraisal process

Independent Assessment

The appraisal process has recently changed to introduce appraisal management companies (AMC) that typically handle much of the coordination and communication between appraisers and homeowners.  They are the ones who accept the appraisal fee and then pay the appraiser for that fee to prevent the homeowner from paying the appraiser directly.

Part of the role of “AMCs” is to ensure the valuation is uncompromised—in other words, there is no interaction between the appraiser and the lender to manipulate the valuation in favor of getting the valuation to a certain level.

Managing Expectations

You can do a few things in advance to help prepare for the appraisal and manage your expectations accordingly.  Many homeowners today look to online tools such as Zillow and Redfin, which offer estimates of home values for online users.  However, it’s important to recognize those estimates are merely that and should not be taken for fact.  The only way to get an actual valuation of your home is through a licensed appraiser.

Remember that the real estate market may have shifted dramatically since the last time your home was sold, and its value may have changed substantially.  By being realistic about these changes, you can better manage your expectations for receiving your appraisal.

Fees, AMCs, and Appeals

The appraisal fee, which currently runs between $450 and $550 depending on where you live, is paid to the AMC.  The AMC will work with the appraiser to coordinate an appointment with you.  Once you have ordered an appraisal, it can take 15 to 30 days to complete the process, including scheduling, the appointment, the research, and the final valuation.

Homeowners do have the opportunity to appeal an appraisal if they feel the valuation is way off base.  However, only in a very small percentage of cases will an appealed appraisal result in a new valuation.

How to Prepare for Your Home Appraisal: A Comprehensive Checklist

A critical step when applying for a reverse mortgage is the home appraisal.  This process assesses your home’s value, which is crucial for determining your loan amount.  We have compiled a thorough checklist to help homeowners navigate this process smoothly.

  1. Inspection Preparedness: The appraisal begins with an inspection.  Ensure your home is accessible, with all areas readily available for review.  This includes exterior spaces, basements, and attics.
  2. Condition Matters: Homeowners should address any maintenance issues beforehand.  A well-maintained home can positively influence its appraised value.  Key areas of focus include the home’s structural integrity, the condition of major systems (like plumbing and electrical), and overall cleanliness.
  3. Special Requirements for California Homes: For properties in California, specific regulations require smoke detectors in all bedrooms and earthquake straps on water heaters.  These additions comply with state laws and can impact the appraisal outcome.
  4. Final Steps: After the inspection, appraisers conduct research to compare your property with similar ones in the area, culminating in a detailed appraisal report.  This document is vital for proceeding with your reverse mortgage application.

Preparing for an appraisal might seem daunting, but with the right checklist, you can ensure your home is showcased at its best.  Addressing the mentioned areas can significantly smooth the appraisal process, leading to a more favorable assessment of your home’s value.

Download our appraisal PDF checklist here for a detailed breakdown and more tips on preparing for your home appraisal.

Appraisal FAQs


Is an appraisal required to obtain a reverse mortgage?

Yes.  A complete FHA appraisal is required to obtain a reverse mortgage.  In some instances, a second appraisal can be required as well.  It is at HUD’s sole discretion whether a second appraisal is required.  If two appraisals are required, the lower values will be used for the reverse mortgage calculations.  Proprietary (Non-HUD insured reverse mortgages) can also require two appraisals, but only when the home is at or above $2 million.

Can I choose who appraises my home?

No.  All loans, including reverse mortgages, must adhere to Federal Appraiser Independence guidelines.  Those guidelines stipulate that neither the homeowner nor the lender can select the appraiser who appraises the home.  An independently selected qualified appraiser must perform it.

How long until the HECM appraisal expires?

The Department of Housing and Urban Development (HUD) sets the timeframe for the effective dates of documentation related to the Home Equity Conversion Mortgage (HECM) reverse mortgage program.  Currently, appraisals are valid for 180 days.  Previously, the validity period was 120 days.  HUD also once allowed a short extension at the underwriter’s discretion.  Should market values start to decrease or if the market becomes unstable, HUD may revise its parameters to a different timeframe in the future.  However, as of now, appraisals are valid for 180 days.

How much does an appraisal cost?

Appraisal costs will vary widely depending on several factors.  The location, home size, value, and land amount influence the appraisal cost.  Larger homes, larger lot sizes, and rural properties have higher appraisal fees due to the complexity of the assignment.  To determine the approximate cost for an appraisal of your home, you would need to obtain a quote from a lender.

What happens if I disagree with the appraiser’s opinion of value?

A homeowner is permitted to challenge the result of an appraisal.  You can submit a request for reconsideration of value if you have 3 recent comparable sales that you feel are more comparable than the ones used by the appraiser.  The appraiser must review those comparable sales presented and either utilize them or address why they cannot be used as comparables.  If there are no additional comparable sales, there is no recourse for a simple disagreement with the appraisal, as the guidelines do not permit you to obtain another appraisal until the initial appraisal expires.  Once the appraisal expires, you can start the loan application again and obtain another appraisal.

Can a recent FHA appraisal be used toward a reverse mortgage loan?

Every FHA appraisal is tied to a specific Case Number and specific transaction.  You cannot use one appraisal for another Case Number/transaction.  The Case Numbers are assigned by the HUD portal online system, and then the reverse mortgage appraisals are delivered back to HUD before the lender.  To summarize, you cannot use an existing appraisal, FHA or otherwise, for a new reverse mortgage loan.

If a reinspection is required, will the appraiser charge an additional fee?

Yes.  The fee for a reinspection can vary depending on factors such as what needs to be inspected and your geographical location.  The cost may increase if you are situated in a remote area due to substantial travel time.

If the reverse mortgage company declines your loan, are you still required to pay for the appraisal?

You must still pay for the appraisal even if the reverse mortgage company declines your loan.  The appraisal fee is paid to the appraiser or the appraisal management company to establish the value of your home, not as a guarantee of loan approval.  This cost is not a fee to the lender, and lenders are prohibited from adding any extra charges to the actual cost of the appraisal.  Like a non-refundable credit report fee, the appraisal fee is for the service performed, whether the loan closes or not.  If the service (appraisal) is canceled before being performed, you may be eligible for a refund.  A full refund should be issued if the appraiser has yet to start their work.  If the appraiser visits the home but still needs to start the actual appraisal, they might charge a trip fee.  Lenders must legally disclose all closing costs before any service is paid for.  If your loan is declined due to eligibility issues or changes in loan terms and you were informed about the fees beforehand, the lender has complied with lending laws.  However, if the lender decides not to proceed with the loan for other reasons, you could discuss the possibility of a refund with them.  Lenders and investors may work with borrowers regarding outstanding costs when a loan becomes unviable, but this does not guarantee a refund.

Can a borrower reject an appraiser if they have a poor reputation online?

Under the HUD appraiser independence rules, neither the loan originator nor the borrower is allowed to select the appraiser.  However, if an appraisal management company assigns an appraiser with whom you are familiar—either through personal knowledge or due to their reputation—and you are dissatisfied with their selection, you may refuse their choice and request a different appraiser, provided you do so before the appraiser schedules an appointment or arrives at your property.  If you consistently reject multiple HUD-approved appraisers, the management company may decline your request, and the lender might inform you that they cannot proceed with your loan application.  It’s common for individuals to value their own homes more highly than an impartial third party might.  Even professionals with experience in valuation and appraisal, including myself, have disagreed with appraisers’ valuations of their own homes.  Unless the negative reviews you’ve encountered indicate serious professional shortcomings (such as missed appointments, excessively delayed assignments, or lack of professionalism), consider that most appraisers face criticism for valuations that don’t meet the owners’ expectations.  Requesting a different appraiser might delay your loan process, particularly in areas with limited FHA/HUD-approved appraisers.

Is it advantageous for a lender if the appraisal for a reverse mortgage comes in low?

No.  Lenders prefer higher appraisals for reverse mortgages for several reasons: it increases the amount borrowers can receive, reduces the likelihood of loan cancellation, ensures sufficient funds to clear any existing liens, and generally results in more satisfied homeowners.  High appraisals are favorable because all loans are insured by HUD, which also prefers appraisals to match or exceed initial homeowner expectations.  However, lenders cannot influence the appraisal process, a safeguard established after the 2008 mortgage market collapse to prevent inflated property values.  Appraiser Independence Laws now prevent lenders, originators, and borrowers from discussing values with appraisers.  With HUD reverse mortgages, appraisals are first reviewed by HUD to decide if a second appraisal is needed, ensuring values are not overstated.  HUD requires its approval of the appraisal before lenders can issue loan approvals, aiming to protect against inflated appraisals, which caused significant losses between 2012 and 2018.

What types of property improvements can an appraiser consider?

You can inform the appraiser about any recent improvements or upgrades to the property.  It’s then the appraiser’s responsibility to decide if these upgrades justify an adjustment based on comparable sales.  If comparable sales feature original equipment, the appraiser might apply a condition adjustment.  For specific item adjustments, HUD requires appraisers to find sales with and without such features to support the value of the upgrades.  For instance, comparing properties with and without pools or patios can help determine the value added by these amenities.  However, it’s challenging for appraisers to quantify the added value of items like shutters or screens, as any adjustments would be subjective, and HUD does not permit subjective adjustments.  Appraisals are a highly scrutinized aspect of the lending process.  Many enhancements homeowners believe should increase their home’s value are often seen as personal preferences, which might translate to something other than higher appraised values.  Even if such features could fetch a higher price in a sale, the appraiser must adhere to HUD property guidelines and rely on concrete sales data for adjustments beyond general condition improvements.  This is because the appraiser must base adjustments on objective data rather than personal opinions or preferences without a direct buyer-seller agreement on value, as in a refinance transaction.

Is an unpermitted room included in the appraisal for square footage?

The decision to include an unpermitted room in the appraisal’s square footage rests with the appraiser.  The unpermitted space must be workmanlike, comply with neighborhood and zoning restrictions, and have adequate, comparable sales to support additional value for the appraiser to consider.  If the unpermitted room fails to meet these criteria, the appraiser might exclude it from the square footage calculations and could also account for potential tear-down costs in the value estimation, depending on the situation.  Furthermore, if the unpermitted space does not meet HUD requirements, HUD might not approve the room in a property securing a loan they insure, such as a reverse mortgage.  It’s advisable to consult with a lender about your specific situation if you have any unpermitted space.  Depending on the details, the lender might find it manageable or make the property ineligible for a loan with HUD-insured financing.

Does the appraiser know the amount the reverse mortgage company is offering?

No.  Not only is the appraiser not given any details of the loan transaction, but the lender is also forbidden by law to discuss the valuation process with the appraiser.  If it is a purchase transaction, the appraiser would know the purchase price, but that would be all.

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