Real estate value checks are the old way to find out if you should proceed with a loan and desktop appraisals or BPOs are the new way to find out if your should proceed with a loan.

<<>> Real estate value checks are sometimes called comp checks. This is when a loan officer will contact a real estate appraiser. The appraiser will review the subject (the borrower’s home) and look for comparable sales for the subject. The appraiser will make mental adjustments to the comparable sales to derive at a value. This value will be given to the loan offers to see if they can make their deal work. This practice was not suppose to happen, but it was so common in the industry, the if you didn’t complete comp checks you may lose out on ½ of the available work that you completed value checks for.

During a real estate value check, the appraiser will not go to the home. It is simply a good faith estimate. The appraiser completes these for free as good faith that the loan officer will use the appraiser to appraise the home. This is the old method of doing business.

A new policy called the HVCC (Home value code of conduct) regulations has been put into place to stop this practice. Basically, this new policy will not allow any contact with the loan officer so that the loan officer or anyone else will influence the appraiser when valuing the home.

My understanding is that while this is not suppose to happen, there are some appraisal companies that still agree to do real estate value checks (comp checks) in an attempt to get more business, however the loan offer’s company is still suppose to rotate appraisers. This new system is supposed to protect the home owner and prevent fraudulent appraisals.

If these real estate value checks are not completed, the home owner is usually responsible for paying the bill, if the value does not allow the loan to close and the deal to go through. The owner is responsible for paying the full cost of the appraisal fee. The appraisal fee will usually be a $400 to $600, depending on the company that you use.

The best way to proceed with a loan now is to order a desktop appraisal from a real estate appraiser first, before you speak to a loan officer. A desktop appraisal is completed by an appraiser. The appraiser determines the value of your home similar to the methods used during a real estate value check, but they give you a written report that shows you the comparable sales used to determine the value. The cost of this type of appraisal is usually less than $200. If your home is in average conditions and is typical for the market area, this type of appraisal is 95% or more accurate. If your home is non-conforming (in other words, your home is unique or different), this may not be the best type of appraisal. If the data in your market area is difficult to get, this would not be the best appraisal to get, either.