Loans By Kathy: Buying a Georgia home in 2012? - Let's Talk the Appraisal Process

Buying a Georgia home in 2012? - Let's Talk the Appraisal Process

You've completed the mortgage application now it's time to move onto the next step. Your mortgage lender will order an appraisal in compliance with the Home Valuation Code of Conduct (HVCC).  The HVCC dictates the appraisal report must be ordered through a third-party management company. This policy also restricts any communication between your loan officer and the appraiser.


Your financing is going to be predicated on the appraised value. This means that either the appraised value or purchase price will be used as the benchmark to determine the maximum loan amount.

As an example, if you make an offer to purchase a home at $100,000 using FHA financing your maximum loan amount would be $96,500. This assumes that the home will appraise for $100,000.

However, if the appraiser determines the value to be $95,000, then the maximum loan amount would be $91,675.

So what happens in this situation is either:

1.The seller reduces the purchase price to $95,000

2.The buyer borrows $91,675 and pays $8325 to close the transaction

3.The buyer and seller renegotiate the terms of the sale and compromise somewhere in the middle


For more information about purchasing a home please review the previous posted articles. For information regarding your specific situation please contact your licensed mortgage professional.




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Kathy Sheehan Senior Loan Officer






Bay Equity LLC

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The opinions and general information in this blog are soley those of Kathy Sheehan.  Specifics regarding an individual case should be discussed in detail with a loan professional.  For a confidential consultation, please feel free to contact me via phone or email.  All terms and conditions are subject to change.


Comment balloon 4 commentsKathy Sheehan • January 16 2012 03:55PM


Some deals fall apart because of appraisal. In the State of Connecticut, I don't understand why a bank would use an appraiser who is located 100 miles from the subject property. There were times that I have to feed essential information to the appraiser to ensure that the comps that need to be utilized and or used were in his possession.

Posted by Maria Gilda Racelis, Home Ownership is w/in Reach. We Make it Happen! (Home Buyers Realty, LLC-Manchester, Bolton. Vernon,Ellington) over 7 years ago

Maria, that happens because of the implementation of HVCC.  The appraisal management companies send out the appraisal assignments based on a rotation system rather than selecting an appraiser in closer proximity to the subject property. 

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) over 7 years ago

Good Afternoon Kathy, this has been some of the worst regulations they came up with. Although well meaning it is a nightmare. the best appraisers should be rewarded for their hard work and keep these inexpereinced out of town appraisers from messing up appraisals. thanks for bringing up a good topic

Posted by Scott Godzyk, One of Manchester NH's Leading Agents (Godzyk Real Estate Services) over 7 years ago

Scott, I may be stepping on my soap box here.  I agree with you completely, while I agree with the original intention of minimizing undue influence on the appraisal, I think HVCC has been poorly executed.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) over 7 years ago