Who orders the appraisal when you buy a house?

The lender orders it, even though you pay for it

This surprises a lot of first-time buyers. You pay for the appraisal, but you do not get to choose who does it. It is a bit like paying for the referee and then learning you cannot pick your cousin.

Fannie Mae's Selling Guide puts it directly: the lender is responsible for selecting appraisers and for the quality of their work. It also says quality has to outweigh fee or turnaround time when the lender chooses.

Many lenders hand the ordering to an appraisal management company, usually called an AMC. Fannie Mae allows that, but the lender stays on the hook for the work as if the appraiser were its own employee. Navy Federal describes the same setup from the borrower's side: the lender collects the fee, but federal law requires the appraisal function to stay separate from the loan process.

Why buyers, sellers and agents can't pick the appraiser

Everyone in a purchase wants the same thing: for the deal to close. The buyer wants the house, the seller wants the money, the agents want to get paid, and the loan officer wants the loan funded. That is a lot of people hoping for one particular number.

The appraiser is supposed to be the one person in the deal who is not hoping for anything. That is the whole point.

So Fannie Mae says lenders may not use appraisals ordered or received by borrowers or other parties with an interest in the transaction, and it names the property seller and the real estate agent as examples. If you hire your own appraiser and hand the report to your lender, it will not count for a Fannie Mae loan.

The federal Truth in Lending rules on valuation independence go further. They make it illegal to coerce, bribe or intimidate an appraiser to hit a value. They give examples: pushing for a minimum value, withholding payment because the number came in low, or hinting that future work depends on the result.

What you are allowed to do

Independence does not mean silence. The same federal rule lists things that are allowed, and they are useful:

• Ask the appraiser to consider more information. Sales the appraiser may have missed, permits, or a list of upgrades with dates.
• Ask for factual errors to be fixed. Wrong bedroom count, wrong lot size, a pool that does not exist.
• Ask for more detail or an explanation of how the value was reached.

On Fannie Mae and Freddie Mac loans, there is also a formal path called a reconsideration of value (ROV). You make the request through your lender, and you can include up to five other comparable sales with their sources.

What you cannot do is call the appraiser and say, "We really need $750,000." That is not information. That is a wish with a phone number attached.

What to do if you are buying with a loan

1. Ask your loan officer how the appraisal is ordered. Directly or through an AMC, and what the expected timeline is.
2. Ask what the fee is and when you pay it. It is usually collected by the lender up front.
3. Give access details to your agent. The listing agent or seller usually lets the appraiser in. Make sure the lockbox code and gate keys work.
4. Prepare a one-page fact sheet for the appraiser: upgrades, dates, permits and any recent sales you know about. Hand it over at the visit or send it through your lender.
5. Ask for your copy. Federal rules require the lender to send it promptly once it is done, or at least three business days before closing, whichever comes first.
6. If the value looks wrong, use the ROV process. Bring sales and facts, not adjectives.

When you can hire the appraiser yourself

The lender rule only covers appraisals used for the loan. Plenty of appraisals have nothing to do with a lender, and for those you are the client and you choose who does the work.

Most of my practice is that kind of work: appraisals for estates and trusts, divorces, pre-listing pricing and consulting. In those assignments the person or attorney who hires me is my client. My job is still the same: an independent value based on what the market actually did, whether my client likes the number or not.

One caution. If you hire your own appraiser before selling, that report helps you price the home. It will not replace the buyer's lender appraisal. The buyer's lender will still order its own, because Fannie Mae will not let it use one ordered by an interested party. Think of your report as homework, not a hall pass.

For tax or legal uses, such as an estate or a divorce, ask your CPA or attorney what the report needs to include.

What I see in the field

The system works better than people think. I get an order, I do not know the buyer, I do not care what the agents earn, and nobody calls me to suggest a number. When someone does try to nudge, it is usually an agent with a stack of sales and a lot of hope.

Here is my honest advice to agents: the stack of sales is welcome. Send it through the right channel. Recent closed sales with real details help me. Commentary about how much the buyer loves the kitchen does not. Facts over feelings works in both directions, and it works best when it arrives in writing.