Appraisers Need Ratified Contracts & Comps That Close Prior to Inspection


    This is a reminder that we need a fully ratified contract (signed by all parties) before we can order an appraisal.

    This is a regulatory requirement and many appraisers won’t even accept orders without ratified contracts.

    Appraisers need ratified contracts so they can review all the terms within it to see if anything might impact market value.

    Examples of items that might affect value are substantial credits for closing costs, seller financing, rent-backs that are overly favorable to the buyer, etc.

    Realtors sometimes send unratified contracts and ask us to order the appraisal, but if the inspection takes place before the contract is fully ratified, the appraisal will be invalid.


    Another reminder is that an appraiser cannot consider a comparable sale that closes after the appraiser inspects a property in the opinion of value.

    The only way to use a comp that closes after the original inspection is to order an entirely new appraisal (with a new inspection that will take place after the comp closed).

    Note, however, that appraisers do include pending sales and even comps that close after inspection dates in their appraisal reports, but those comps are only provided to convey the most current market conditions.  Appraisers, once again, do not consider those comps in their opinion of value.

    Jay Voorhees
    Founder/Broker | JVM Lending
    (855) 855-4491 | DRE# 01524255, NMLS# 310167

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