Reconsideration of Value Overview
Premia Mortgage, LLC (NMLS # 458540)
Please fully read and understand this document before completing a Reconsideration of Value Request Form.
What is an Appraisal of your property?
An appraisal is an opinion of value determined by a licensed real estate appraiser and provides your lender an opinion of how much your property is worth in your market (fair market value). Lenders require an appraisal to confirm that the property offered as collateral for your loan has sufficient value to support the requested loan amount. Appraisers must follow systematic procedures as defined by the Uniform Standards of Professional Appraisal Practice (USPAP). These rules govern things like the selection of comparables, acceptable methods for making adjustments, along with standards for professionalism and ethics.
What is a Reconsideration of Value?
A Reconsideration of Value (ROV) is a request made by a consumer for the appraiser to reevaluate the analysis and conclusions of the initial appraisal using additional information provided by the consumer that the consumer believes to be relevant to the appraiser’s value determination. Premia Relocation Mortgage (“Premia”) requires the consumer to complete a Reconsideration of Value Request Form which includes the information, data, or comparables that the consumer believes will impact the value conclusion.
Keep in mind, just because your appraised value came in lower than you expected, this doesn’t necessarily mean your appraisal is flawed or that another appraisal would yield a higher appraised value. Appraisal reports capture the appraiser’s opinion of value in a snapshot in time, meaning an appraisal report performed six months ago or six months in the future may very well produced a different opinion of value. If the appraiser does not adjust the value this also doesn’t necessarily mean the appraiser is wrong – the appraiser is required to meet the standards provided under USPAP which may limit their ability to consider certain facts or information you provide. In all instances, if you believe your appraisal is deficient, we strongly encourage you to submit an ROV request to help us ensure that your appraisal report accurately reflects the value of the property.
Concerns About Appraisal Bias or Discrimination
Premia takes its role in ensuring fair and responsible lending very seriously and does not tolerate bias or discrimination in any aspect of the origination process – including in the appraisal process. The Fair Housing Act does not permit any form of discrimination on the basis of the applicant’s race, color, national origin, religion, sex (including gender identity or sexual orientation), marital status, military status, or disability. In addition, the Equal Credit Opportunity Act further protects applicants on the basis of their age, or receipt of public assistance. Should you have any concerns that the value conclusion in your appraisal was in any way impacted by bias or discrimination, please provide those details in your ROV Request Form, marking the appropriate box, and emailing your completed form to [email protected].
How the ROV Process Works
- You may complete the ROV Request Form (the “Form”) on your own or consult with your real estate agent or loan officer for their input as to which comparables or other relevant information may be beneficial to include with your request. Even if your real estate agent or loan officer does not believe that submitting a ROV Request will result in a change in the value conclusion, you are still entitled to do so.
- You may use the Form to indicate the purpose of the ROV:
- To correct factual errors in the report (e.g. report indicates your property has 3 bedrooms, but it actually has 4; the gross living area is understated; the age of the home is misstated);
- To request consideration of what you believe to be better comparable sales; and/or
- To report concerns of bias or discrimination in the appraisal process.
- You must complete and sign the Form and return it to [email protected]. Simply requesting a Form does not constitute an ROV request, the form must be returned for the Company to take action.
- The Form will be reviewed by the Company’s Appraisal Desk to ensure it is completed correctly, provides sufficient information for the appraiser to consider, and does not violate Appraiser Independence Requirements.
- Provided that the Form is acceptable, the Company’s Appraisal Desk will submit the ROV request to the appraiser.
- The appraiser will consider each element of the request and may agree or disagree that an adjustment or correction to the report is appropriate. The appraiser is an independent valuation professional who will determine whether or not the appraisal report warrants a change and cannot be directed by you or Premia in accordance with Appraisal Independence Requirements.
- Your loan officer will communicate the outcome of the ROV to you.
How to Complete the Form
Please be as detailed as possible in providing information for the appraiser to consider. If you are working with a real estate agent, they may be able to provide you with comparable sales in the market. If this is a refinance transaction, you may use tools like Redfin and Zillow to find recent sales activity – but keep in mind, listings cannot be used. For factual errors, please provide which data points are inaccurate (number of bedrooms, number of bathrooms, GLA errors, age of home errors, presence or absence of a fireplace, parking garage, swimming pool, etc.).
General Guidance on Comparable Selections
Comparable sales often play a significant role in determining the appraised value. The appraiser is responsible for determining which comparables are the best and most appropriate for the assignment based upon a variety of factors. Here are a few general guidelines they must consider that should guide you in this Reconsideration of Value process:
- The comparable must be for a closed sale, meaning an appraiser cannot utilize a property listing or contingent sale as a comparable. The closed date of the comparable must be prior to the appraisal report completion date (effective date). The appraiser must utilize at least 3 closed sales.
- Comparables should represent recent sales in the market. As a general rule of thumb, the comparable sale must have closed within the last 6 to 12 months. The best and most appropriate comparable sales may not be the most recent. An appraiser may have to use a time adjustment depending on when the sale took place relative to changes to the market.
- Comparable sales should be proximate to the subject property and ideally located in the same geographic neighborhood. For instance, if the property is located in a sub-division, the best comparables are the recent sales of similar homes in the same subdivision. If proximate comparables are not available due to a shortage of truly comparable sales, the appraiser may select comparables from competitive neighborhoods provided that the appraiser provides an analysis and commentary on why comparable sales in a competitive neighborhood were most appropriate.
- Comparable sales should have similar physical characteristics (e.g. similar room count, gross living area (GLA), style (e.g. ranch, split level), and condition). This does not mean the comparable must be identical to the subject property, rather it should appeal to the same market participants who would also consider purchasing the subject property. The appraiser may make adjustments for dissimilar characteristics such as GLA, room or bathroom count, condition, etc.
Appraiser Independence Requirements
The Appraiser Independence Requirements prohibit anyone from influencing or trying to influence an appraiser’s value conclusion through coercion, collusion, compensation or intimidation. To avoid any appearance of influence please:
- Do not give your value conclusion or mention the final market value or range of values you desire;
- Please do not provide a prior appraisal report; however, you may include comparables from that report should they still be timely;
- Please be respectful in providing your narrative about your concerns with the appraisal;
- We may ask you to resubmit the ROV Request Form if these guidelines are not followed.