When Is An Appraisal Ordered In The Loan Process?

If you are buying a home in Illinois and obtaining mortgage financing, the property appraisal is obviously a critical step in the loan approval process. But when exactly during the mortgage transaction timeline can you expect the appraisal inspection and report to occur?

Getting a mortgage to purchase a home is an exciting yet complicated process One of the key steps is the appraisal, which determines the market value of the home you want to buy. But when exactly in the process is the appraisal ordered?

As an experienced mortgage broker, I’m often asked by clients when the appraisal happens and how long it takes. The timing of the appraisal is important because it can impact your closing date and overall mortgage experience In this article, I’ll walk through the typical timeline of when an appraisal is ordered during the home buying process

Overview of the Mortgage Process

Before jumping into the appraisal timeline, let’s do a quick review of the major steps when getting a mortgage

Preapproval – You get preapproved by a lender to determine your budget and price range. Preapproval is based on your finances, not a specific property.
Finding a home – Once preapproved, you can start seriously looking for homes within your budget. Your real estate agent will help you identify options.
Making an offer – When you find the perfect home, you’ll make an offer and negotiate a purchase price with the sellers.
Under contract – If your offer is accepted, you are now under contract. You will put down an earnest money deposit and develop a timeline for inspections, appraisal and closing.
Mortgage processing – Your lender formally reviews your finances, including income, assets, debts and credit. They order the appraisal and title work.
Appraisal – An independent appraiser will visit the property and determine its market value. The appraisal ensures the home is worth the loan amount.

–Final approval – The lender reviews the appraisal, title work and application details. If everything looks good, they will issue a clear to close.

Closing – This is when you sign all the paperwork and get the keys! Funds are disbursed to the seller and your loan starts.

Now that we’ve covered the major steps, let’s focus on where the appraisal fits into this timeline.

When Does the Lender Order the Appraisal?

The lender orders the appraisal once you are under contract and have indicated you intend to move forward with their financing. Here are the specifics:

After the purchase contract is fully executed – This means after you and the seller have both signed the purchase contract and all details are formalized. This contract will state the agreed upon price and closing date.

When you give notice to proceed – As the borrower, you have to give the “green light” to order the appraisal, which initiates costs. This is usually done after the financing contingency period expires.

Early in the mortgage processing phase – The lender will place the appraisal order in the first few days of the processing phase, so the results are back in time for underwriting.

Essentially, the lender won’t order the appraisal until you are under contract and committed to using their financing. This ensures you are serious about buying the home before paying for the appraisal.

Why the Appraisal Timing Matters

Ordering the appraisal at the right time prevents wasted money and delays. Here’s why the timing is important:

Appraisals have a shelf life – Appraisals are only valid for 90 days in most cases. If ordered too early, the report could expire before closing.

Results impact the loan – The appraised value determines the loan amount and loan-to-value ratio. The lender needs the information before underwriting.

Closing date depends on it – The appraisal must be back before you can close. Waiting too long to order it can push back your closing date.

Buyer pays for it – Even though the lender orders the appraisal, the homebuyer pays the appraisal fee. You don’t want to pay for it too early.

Can’t be rushed – Appraisers have busy schedules. Rush orders can increase the cost. Ordering it at the standard time ensures a reasonable turnaround.

The timing maximizes the validity of the appraisal and ensures the results are ready when needed by underwriting.

Walking Through a Typical Appraisal Timeline

Now let’s look at a typical timeline for when the appraisal is ordered and completed during a real estate purchase. This example assumes a 30-day escrow.

Day 1 – Your offer is accepted! The seller signs the purchase agreement. Earnest money deposit is due.

Days 2-7 – The financing contingency period expires. You give notice to proceed with the lender’s financing.

Day 8 – The lender orders the appraisal through an appraisal management company.

Days 9-10 – The appraisal management company assigns an appraiser and contacts you to schedule a property visit.

Days 12-14 – The appraiser visits the property, takes photos, measures the home, analyzes comparables and writes up their report.

Days 15-20 – The appraisal report is completed, reviewed by the management company for quality, and submitted to the lender for underwriting.

Days 28-30 – The lender reviews the appraisal. Ensure value supports loan amount. Final underwriting is done and closing is scheduled!

As you can see, the lender typically orders the appraisal within the first week of the offer being accepted. The appraiser then has 2-3 weeks to complete the inspection and submit their report. This ensures the lender has the value in time to underwrite the loan and close on schedule.

Why the Appraisal Takes 2-3 Weeks

Lenders prefer to order the appraisal with at least 3 weeks before closing. This allows sufficient time for the following:

Assignment process – The management company must find an available appraiser and coordinate schedules. This can take a couple days.
Property inspection – The appraiser does a thorough walkthrough and measures the home. For a large or complex property, they may revisit it.
Market research – The appraiser analyzes sales of comparable properties (comps) that have recently sold nearby. More comps can mean more research.
Writing the report – The appraiser compiles their findings into a detailed report with photos, charts and analysis to support the value.
Review process – The management company reviews the report for any errors or concerns before submitting to the lender.
Underwriting – The lender must have at least a week to incorporate the appraisal into the underwriting of the loan.

Two to three weeks allows time for all these steps before closing. However, it’s possible to expedite the timeline if needed for a faster close.

How to Speed Up the Appraisal

In some cases, buyers need the appraisal done more quickly to meet their closing date. Here are a few tips to expedite the process:

Pay for a rush order – Most management companies offer rush orders for an additional fee, guaranteeing a faster turnaround.
Be flexible on timing – If the appraiser has wide availability to schedule, it allows them to complete the inspection and report faster.
Provide property details – Giving the appraiser blueprints, survey or renovation records upfront can reduce research time.
Follow up regularly – Politely following up with the lender and appraiser can help prioritize your report.

Keep in mind that shrinking a 20+ day process down to less than 2 weeks can significantly increase the rush fees. The priority is completing the appraisal in time for underwriting approval and closing—not necessarily speeding up the process for its own sake.

How Much Does the Appraisal Cost?

While timely, the appraisal also adds another cost to the buyer during the home purchasing process. Here’s an overview of what to expect:

Average cost is $400-$500 – The typical single-family appraisal costs $400 to $500, depending on your market and location.
Rush fees add $100-$200 – If expedited, rush fees tack on an extra $100 or more to the standard cost.
Complex properties cost more – Unusual homes, large acreage, custom builds and unique features can increase fees up to $800+.
VA and FHA loans cost more – Appraisals for government-backed loans have more requirements and can be $550+.

As the buyer, you pay the appraisal fee. Most lenders collect the money upfront when the appraisal is ordered. In some cases, it can be rolled into closing costs. Either way, the appraisal is a key step that ensures you and the lender are making a sound investment decision in the home purchase.

When Appraisal Delays Happen

Ideally the appraisal is completed within 2-3 weeks as outlined above. However, unexpected delays can push back the timeline by days or even weeks:

Appraiser availability – If appraisers in your area are booked up, it may take longer to get an inspection scheduled.
Weather delays – Snow,

Days 5 to 15: Initial review of your application

The lender and their underwriters will do an initial review of the loan application, documents provided, purchase contract, and overall transaction details. Preliminary underwriting begins.

Days 15 to 30: Lender Orders Appraisal

Assuming no major issues or red flags with the initial application, the lender will order the appraisal from an approved appraiser around the 2 to 4 week mark of the loan review process starting.

When is the appraisal ordered?

FAQ

At what point in the loan process is an appraisal ordered?

An appraisal report determines the home’s value during the home loan process. We order the appraisal during the loan setup stage of the mortgage loan process. You must first sign and return the loan disclosures before we can place the order and start the home appraisal process.

Is an appraisal done before or after underwriting?

While the underwriting process is happening, the lender will order an appraisal, typically conducted by a licensed appraiser, to assess and evaluate the property a borrower wishes to purchase.

What comes after the appraisal process?

After the appraisal, the next step is underwriting. The mortgage lender reviews the loan file to ensure that everything is in order, assesses the risk, and either approves or denies the application. Some borrowers might receive conditional approval, meaning that some item needs to be resolved or explained.

Is the appraisal before or after the offer?

Your lender orders the appraisal. If you’re buying a home, your lender will order an appraisal after your offer has been accepted and you’ve signed the purchase agreement. If you’re refinancing, the lender typically orders the appraisal after you apply for the new loan.

How does a mortgage appraisal work?

Getting a mortgage appraisal follows a standardized process, during which an independent, licensed appraiser inspects the interior and exterior of the home, in addition to other factors, before producing an analysis, which includes a professional opinion of the final value of the home. Here’s how the mortgage appraisal process works.

Why do you need an appraisal when buying a home?

When buying a home, your appraisal can play a role in determining if your lender will approve your loan. All lenders order an appraisal during the mortgage process in order to assess the home’s market value and make sure the borrower is not attempting to borrow more money than the house is worth.

How long does a home appraisal take?

On-site home appraisal: This depends on the property and appraiser, but the appraisal itself can take anywhere from 30 minutes to a few hours. Buyer receives appraisal report: You can expect the full appraisal report roughly 6 – 20 days from beginning of appraisal process. Take a look below and see why certain stages can take longer.

What is a home appraisal?

A home appraisal is an estimate of a property’s value by a licensed appraiser. Whether you’re buying, selling or refinancing a home, an appraisal is typically an important part of the process because the results can affect the borrower’s ability to receive a loan.