Cost of appraisal/borrower rights

Question

I understand the lender chooses who performs their appraisal and I cannot shop around for this, but I want to know that they aren't inflating the charge.

1. Is this reasonable?

2. How should I word the request for the appraisal company's invoice?

Answer 1

You can't shop around for the appraisal, but you do have a right to know what the appraisal costs before you go into the loan (before you take any step which would cost you money). That will be listed on your "Good Faith Estimate" (GFE) that you will receive prior to anything being done.

The amount actually charged by the appraisal company may not vary by more than 10% from what is on the GFE. So you will know what it will cost going in, and you are welcome to shop based on this cost - i.e., call different mortgage companies and ask what their appraisals cost for your kind of property. In general appraisals for a particular kind/size of property are fixed cost for any given appraiser, so the mortgage company should be able to quickly tell you.

Another thing you should consider is calling around and finding out what appraisers charge. Find a few that are used by other mortgage agencies in your area - it shouldn't be hard to find that information; if nothing else, call the major banks in your city and ask them who they use for appraisals. Then ask what they charge. There will be some variation, so don't be shocked if they're a bit under what you pay, but they should be within 10-20%.

Finally, you can look up average costs on several sites. Bankrate lists the average costs for your area (Mississippi, from comments) as $449.

You also are welcome to ask for a copy of the appraisal (in fact you should receive one even without asking, I always have), and that includes the bill. The appraiser should be able to give you all of that. The actual cost will be presented at the closing, and if they actually inflated that cost they would be committing fraud - so it is unlikely that is being inflated assuming you are borrowing from a reputable mortgage agency. But you certainly can ask for the actual invoice, and at least at one closing I was at the invoice was at closing.

As far as using the FHA appraisal, and the other details there, you may want to ask that in another question.