The Anatomy of An Appraisal: Part 2 — Order Up!
In Part 1 of this series, we explored how and when a real estate appraisal is ordered, and who initiates that process. Now, in Part 2: “Order Up!”, we follow the next phase of the journey: what really happens when an appraisal order gets assigned. This is where ValuDesk’s expertise shines – from selecting the right appraiser for the job, to defining the assignment’s scope, to laying the groundwork for a credible report. We’ll break down the appraisal assignment process in detail, explain how appraisers are matched to assignments, discuss the all-important Scope of Work, compare different types of appraisals (VA, FHA, conventional, commercial), and show why early communication sets the tone for success. The goal is to demystify this stage for readers new to real estate or lending, all in ValuDesk’s professional and authoritative voice.
Assignment Channels: Lenders, AMCs, and Direct Engagement
Once an appraisal is ordered (typically by a lender during a mortgage process), it needs to be assigned to a qualified appraiser. But how does it get from the lender’s desk to an appraiser’s hands? There are a few pathways, and understanding them will clarify who’s involved and why:
Lender In-House Panel (Direct Engagement): Some lenders maintain their own roster or panel of approved appraisers. In these cases, a designated appraisal coordinator at the bank will select an appraiser from their list. Importantly, banking regulations require that this selection is done independently of the loan sales team – no loan officer hand-picking the appraiser for their deal . The lender’s appraisal department uses a rotation or criteria-based system to ensure fairness and compliance. This direct engagement means the lender reaches out to the appraiser with the assignment (often via a formal engagement letter outlining the job’s details).
Appraisal Management Company (AMC): In many cases – especially for larger institutions or mortgage brokers – the order is routed to an Appraisal Management Company, a third-party that handles appraisal logistics on the lender’s behalf. The AMC acts as a middleman: the lender sends them the order, and the AMC then selects a state-licensed or certified appraiser from their network to complete the assignment. The AMC handles the administrative tasks: finding an available appraiser, forwarding necessary documents, tracking progress, performing a quality check on the completed report, and delivering it back to the lender. This process became common after regulations increased focus on appraiser independence – by using an AMC, lenders put a buffer between loan production staff and appraisers. For the borrower or property owner, it might not be obvious an AMC is involved, as communication often goes through the AMC seamlessly.
Government Program Assignments: Certain loan programs have their own assignment process. Notably, for VA (Department of Veterans Affairs) loans, the VA itself controls the appraiser assignment. When a VA appraisal is requested, the VA’s system randomly selects an appraiser from its approved panel covering that area. This ensures impartiality and prevents any influence – neither the lender nor borrower chooses the appraiser. The FHA (Federal Housing Administration) loans don’t randomize assignment in the same way as VA, but they do require the appraiser to be on the FHA-approved roster. Lenders can use their panel or an AMC, but they must specifically assign an FHA-certified appraiser for FHA orders. We’ll talk more about VA and FHA requirements later, but the key is that these government-backed loans add extra rules to the assignment step.
No matter the channel, the outcome is the same: a qualified appraiser is engaged to perform the appraisal. At ValuDesk, we appreciate all these workflows. In fact, our system is flexible – we partner with lenders and AMCs, and also serve clients directly. In every case, our priority is that the assignment is handled professionally, ethically, and efficiently. Next, let’s see how we ensure the right appraiser gets the order.
Matching the Right Appraiser to the Job
Not just any appraiser can take on any assignment. Whether through an AMC or a lender’s panel, there is a careful matching process to find the best-suited appraiser for a given order. Several factors come into play in this matching process:
Geographic Expertise: Location, location, location! An appraiser must be familiar with the local market where the property is located. For example, if the property is in Houston, you want an appraiser who knows the Houston neighborhoods and market trends (not someone based three hours away). Most assignment systems filter appraisers by the geographic area they cover. Local expertise is crucial for a credible valuation.
Licensing and Certification: Appraisers have different license levels and credentials, which determine what they’re allowed to appraise. A Licensed Residential Appraiser might handle typical single-family homes up to a certain value, whereas a Certified Residential Appraiser can appraise higher-value or more complex residential properties. For commercial properties, a Certified General Appraiser license is required. The assignment is matched to an appraiser holding the appropriate license for that property type and value range. For instance, if a commercial appraisal is needed, the system won’t assign a residential-only appraiser. Similarly, FHA assignments require an appraiser who is FHA-approved (usually a certified appraiser who has an FHA ID), and VA assignments can only go to VA-approved panel appraisers. Ensuring the appraiser’s qualifications fit the job is not just best practice – it’s often a legal or regulatory requirement.
Experience and Specialization: Beyond the basic license, the experience of the appraiser matters. Assignment managers consider questions like: Has this appraiser handled similar properties? Do they have experience with the specific property type or assignment purpose? For example, if the subject property is a rural acreage with unique features, an appraiser who has done rural properties would be favored over one who mostly does urban condos. Some appraisers also carry professional designations or special training (such as MAI or SRA designations from the Appraisal Institute) indicating advanced expertise. The goal is to match the complexity of the assignment with an appraiser who has demonstrated competency in that arena. Industry guidelines stress selecting an appraiser with the relevant knowledge and experience for the market and property type to ensure a credible result .
Availability and Turnaround Time: Appraisals are often on a deadline (closings depend on them!), so the appraiser’s availability is a practical factor. An AMC or lender might have multiple appraisers who qualify in terms of geography and license – the tie-breaker can be who can accept the order promptly and deliver by the required date. Many AMCs use automated systems that ping a set of qualified appraisers; the first one to accept gets the assignment. Others might assign based on a rotation but will skip an appraiser who is overloaded. ValuDesk, for example, carefully monitors our team’s capacity – we won’t accept an order unless we know we can meet the timeline with our quality standards. Some management systems even enforce this: one national AMC gives an appraiser only a few hours to accept an order before it automatically goes to someone else, to ensure no time is lost. Speed is important, but never at the expense of quality.
When all these factors align, the order is assigned to the chosen appraiser. At this point, there is typically a formal engagement – the appraiser receives an engagement letter or order sheet confirming the assignment details (property address, clients’ instructions, due date, fee, etc.). ValuDesk takes pride in this matching process. By pairing each assignment with an appraiser who has the right local knowledge and skill set, we set the stage for an accurate valuation. It’s not about picking the first name on a list; it’s about choosing the right professional for the job.
Now that the appraiser is assigned, what exactly are they being asked to do? That brings us to defining the Scope of Work for the appraisal.
Defining the Scope of Work: The Appraisal Game Plan
Every appraisal assignment comes with a mission: determine the value of a property under certain conditions. But how the appraiser goes about that mission can differ case by case. This is where the Scope of Work (SOW) comes in. Simply put, the Scope of Work is the game plan for the appraisal – it outlines what the appraiser will do (and to what extent) to develop credible results. Getting the Scope of Work right is crucial, because it guides the entire appraisal process from start to finish.
Who defines the Scope of Work? In appraisal practice, the appraiser is responsible for identifying and executing the appropriate scope. According to professional standards (USPAP – Uniform Standards of Professional Appraisal Practice), an appraiser must “identify the problem to be solved” and then “determine and perform the scope of work necessary to develop credible assignment results”. In other words, the appraiser uses their expertise to decide what level of research, inspection, and analysis is needed for this particular assignment. However, this doesn’t happen in a vacuum – it’s done in communication with the client (the lender or AMC). ValuDesk’s approach is collaborative: we review the client’s requirements and expectations up front, and confirm a scope of work that meets those needs while adhering to appraisal standards. Clear agreement on the scope at the beginning helps avoid surprises later.
What goes into the Scope of Work? Several aspects of the assignment are considered when defining the scope:
Property Type and Complexity: Is this a simple single-family home in a tract subdivision, or a luxury custom home on a large acreage? The more complex or unusual the property, the more extensive the scope might need to be. A simple assignment might entail a standard interior inspection and a sales comparison approach with a few comparable sales. A complex property might require additional approaches (maybe a cost approach, or an income approach if it has rental units), more comparables, or consulting additional data sources. The appraiser assesses the property details (often doing a preliminary review of public records or MLS info if available) to gauge complexity.
Intended Use and Requirements: The purpose of the appraisal influences the scope. For lending appraisals (our focus here), the lender often specifies the format and any required analyses. For example, most home loans use a standardized report form and expect at least the sales comparison approach. Some lenders might require the cost approach on new homes or the income approach on 2-4 unit rentals. If it’s an FHA loan, there are specific inspection items and addendums required (like checking for safety issues, which we’ll mention soon). The engagement letter or order will usually state these needs. The appraiser must incorporate these into the scope. However, if any requested scope element is not appropriate, the appraiser should discuss it. (For instance, if a lender inadvertently orders a less comprehensive evaluation but the property clearly needs a full appraisal for credibility, the appraiser should notify them of the needed change in scope).
Inspection Level: Scope of Work defines whether the appraiser will do an interior inspection of the property or only an exterior inspection (sometimes called a “drive-by appraisal”), or even no physical inspection (as in some desktop appraisals). Most full appraisals for mortgages require an interior and exterior inspection of the subject property. But there are cases (like certain refinancing programs or COVID-era protocols) where an exterior-only inspection might be allowed. If the order comes through as exterior-only, the appraiser ensures that is appropriate for the assignment type. If not, this might be revisited with the client. Additionally, the scope will include the extent of inspecting comparable sales (usually just from data sources and drive-by viewing from the street, not interior of comps) and the neighborhood.
Research and Data Collection: The appraiser decides what data to research: comparable sales, land sales, cost data, rental data, etc., depending on the approaches needed. They also consider if any specialists or additional documentation are needed (for example, a property in a geologically sensitive area might warrant geological report references, or a unique building might need more cost data research).
The Scope of Work can sometimes evolve during the assignment. Think of it as a living plan. For example, during the inspection, the appraiser might discover an additional dwelling unit on the property that wasn’t obvious from the order details – now the scope might expand to valuing that unit, which could involve finding additional comps or considering rental income. Or an assignment might start as a simpler form report, but if the appraiser finds the property is very atypical for the area, they might need to upgrade it to a more detailed narrative format. In such cases, the appraiser will communicate with the client about revising the scope or fee because the “problem to be solved” turned out bigger than initially thought. It’s normal for some back-and-forth at the start of an assignment to fine-tune the scope so that the appraisal will be thorough. In fact, many AMCs encourage appraisers to request clarification or additional fee upfront if complexity warrants it – for instance, one AMC asks that if an appraiser discovers new complexities, they notify the AMC within 18 hours of inspection to adjust the assignment terms. This kind of policy underscores that it’s better to get the scope right early than to do a poor job or scramble later.
At ValuDesk, we emphasize a well-defined Scope of Work on every order. Our team reviews each appraisal order upon assignment, verifies that the requested scope is appropriate, and reaches out immediately if anything needs to be adjusted. By doing so, we ensure that by the time our appraiser starts the fieldwork, everyone is on the same page about how the appraisal will be conducted. This rigor upfront directly contributes to the credibility of the final report. Next, we’ll see that not all appraisals are one-size-fits-all – different loan programs and property types mean the assignment could have very different requirements.
One Size Doesn’t Fit All: VA, FHA, Conventional, and Commercial Appraisals
In real estate appraisal, context matters. The assignment process and scope of work can differ significantly based on the type of loan or property involved. Here we break down some common appraisal types and why not all appraisers do every kind:
Conventional Loan Appraisals: Conventional appraisals are for standard mortgages not insured by government agencies (these loans conform to guidelines of Fannie Mae, Freddie Mac, or are simply bank-portfolio loans). These appraisals typically use the Uniform Residential Appraisal Report (URAR, Form 1004) for single-family homes, or other standard forms for condos, multi-units, etc. The requirements here are generally straightforward: confirm market value for the lender by analyzing recent comparable sales, and include relevant approaches as needed. Most licensed or certified residential appraisers can perform conventional appraisals, and this is the bread and butter of many appraisal businesses. There is a wide range of property types under “conventional” loans – from small city homes to rural properties – but if something is too complex (e.g., an unusual luxury estate or unique property), lenders might have additional expectations (or even require a second appraisal). However, compared to FHA/VA, there are usually fewer prescriptive rules in conventional assignments – the appraiser just needs to meet general industry standards and any lender-specific guidelines.
FHA Appraisals (Federal Housing Administration): An FHA appraisal is done for an FHA-insured loan. While it also determines market value like any other appraisal, it has additional layers. FHA appraisers must be approved and listed on the FHA roster (so not every appraiser can take these assignments – one has to apply and be approved by HUD). FHA appraisals involve checking that the property meets the HUD Minimum Property Requirements/Standards. This means during the inspection the appraiser is attentive to any safety or habitability issues: for example, they will note peeling paint in older homes (potential lead paint hazard), missing handrails, faulty utilities, leaky roofs, etc. If the property doesn’t meet these minimum standards, the appraiser may have to flag it and the issues might need to be remedied or appraised “subject to” repair. The appraisal report for FHA has some different protocols – for instance, the appraiser will include an FHA-specific case number and complete a HUD appraisal report form or addendum that addresses these requirements. As a result of these extra steps, FHA appraisals often have slightly longer inspection and reporting processes, and the appraiser must know the FHA rules well. Not every appraiser chooses to do FHA work; some avoid it due to the extra procedures or the capped fee structure (FHA, like VA, may have local fee limits).
VA Appraisals (Department of Veterans Affairs): VA appraisals are unique in a few ways. First, as mentioned, the VA assigns the appraiser from their panel – lenders and AMCs don’t select the VA appraiser themselves. The VA maintains a rotation to ensure fairness and unbiased assignment. VA-approved appraisers are typically some of the more experienced appraisers in a market, and they agree to VA’s requirements on timeliness and fees. VA appraisals also have Minimum Property Requirements (MPRs) similar in spirit to FHA’s standards – the property must be safe, sound, and sanitary. The VA appraiser will check for things like adequate heating, roofing, no obvious hazards, etc., during the inspection. One notable VA-specific process is the “Tidewater Initiative”: if a VA appraiser realizes the value might come in below the purchase price, they invoke Tidewater, which pauses the process and allows the parties (through the lender) to provide additional comparable sales or data to support the value before the appraiser completes the report . This is a courtesy to help veterans potentially avoid a low appraisal by making sure all info is considered. After an appraisal, if a VA value is disputed, there is a formal Reconsideration of Value process that can be pursued. Because of these unique elements, not all appraisers are on the VA panel – one must apply and be selected by the VA, and there are often limited slots per region. Those who do VA work must be diligent with VA’s rules and timelines (VA appraisals are known for having strict deadlines, often quicker than conventional).
Commercial Appraisals: Commercial property appraisals (which can include anything from office buildings and retail centers to apartment complexes or industrial properties) are a different ballgame altogether. These require a Certified General Appraiser – a higher license level than residential – and often involve much more extensive analysis. The assignment process for commercial appraisals may not use an AMC in the same way (though there are commercial appraisal management firms); often, lenders or clients will engage a commercial appraisal firm directly. The scope of work for a commercial appraisal is typically larger: instead of a standardized form, you may get a lengthy narrative report. Approaches like the Income Approach (capitalizing income streams, using market rents and cap rates) become critical for income-producing properties. The cost approach might be used for specialized properties or new construction, and the sales comparison might require searching a wider market for comparable sales (because commercial properties can be unique). Turnaround times are longer, fees are higher, and the expertise required is specialized. Many appraisers choose to focus either on residential or commercial, rarely both, because each domain has its own skill set. At ValuDesk, our core competency is in the residential realm (including 1-4 unit properties), which means our appraisers stick to what they know best. If a commercial assignment comes in that is beyond our scope, we’ll be frank with the client and help them find a qualified commercial appraiser. The credibility of an appraisal rests on the appraiser’s competency, so we would never stretch an appraiser beyond their specialty.
In summary, not all appraisals are created equal. An assignment’s requirements vary with the loan program and property type. That’s why the assignment process must account for these differences – matching not just any appraiser, but an appraiser who specializes in that type of appraisal. This ensures the resulting report meets all the necessary guidelines and truly reflects an expert’s opinion. If you’re a borrower or real estate agent, you might not know whether your appraiser is FHA-approved or not, or that they had to be VA-appointed, but behind the scenes these factors are carefully considered. ValuDesk’s strength as a valuation firm comes from understanding these nuances and managing them seamlessly, giving our clients confidence.
With the assignment made and the appropriate appraiser on the job (equipped with the right scope of work and knowledge of any special requirements), the next immediate step is crucial: the appraiser’s initial communication and order review. Let’s look at how those first interactions set the tone.
Early Communication and Order Review: Setting the Tone for a Credible Report
The period just after an appraisal is assigned is more important than many realize. This is when the appraiser first engages with the assignment details and the key parties. First impressions matter – and in appraisal work, the way early communication is handled can influence the ease, efficiency, and credibility of the entire process. Here’s how ValuDesk and professional appraisers approach the start of an assignment:
Order Review: As soon as the appraiser receives the order, they review all information provided. This includes the property address, property type, the identified borrower or owner, the intended use of the appraisal, and any special instructions or notes from the client. Often there are documents attached, such as a purchase contract (if it’s a sale), a legal description, or previous reports if available. The appraiser will verify that the property location is clear (double-check mapping/GPS to ensure they know what they’re appraising), and look for any glaring questions. For example, if the order says it’s a single-family home but the legal description or MLS shows a duplex, that’s a red flag to clarify. Or if the contact for access is listed as a tenant, perhaps the appraiser will need to ensure someone provides interior access. This initial scrutiny helps catch any discrepancies or missing pieces before they become problems. ValuDesk’s team, for instance, will immediately reach out to the client if something in the order looks inconsistent or if a required document (like the sales contract on a purchase) wasn’t included.
Clarity on Scope and Instructions: This ties back to Scope of Work – the appraiser double-checks that they understand what’s expected. If the order comes through an AMC portal, there might be a list of specific lender requirements (like “please provide photos of any physical deficiencies” or “report to be made ‘as repaired’ subject to a roof fix” etc.). The appraiser notes all of these. If anything is unusual or potentially problematic (say the lender asks for something that might conflict with appraisal independence or USPAP, such as providing a value “as is” and “after repair” without clarity), the appraiser will seek clarification right away. Early communication with the client/AMC to iron out instructions ensures that the appraiser can proceed confidently. This also includes confirming the due date and making sure it’s realistic. If an order comes in late in the day with a due date that’s too soon to be feasible, it’s best to negotiate that immediately rather than risk a late report.
Scheduling the Inspection: Once the appraiser is comfortable with the order details, the next step is to contact the property representative (homeowner, borrower, or real estate agent – whomever is listed as the point of contact for access) to schedule the property inspection. Professional appraisers aim to do this promptly – ideally within the first 24 hours of accepting the assignment. Timely scheduling is not only good customer service; many lenders and AMCs track it as a performance metric. For example, one major AMC expects the appraiser to confirm an inspection appointment within 48 hours of accepting the order. Quick contact shows all parties that the process is moving. During the scheduling call, the appraiser will typically introduce themselves, explain they’re working on behalf of the lender to appraise the property, and set up a date and time to come see the home. They might also ask a few preliminary questions – e.g., “Is there anything I should know about the property before I arrive (like dogs on site, gated community access, etc.)?” and ensure the right people will be present if needed. This initial interaction with the homeowner or agent sets a professional tone – a courteous, clear approach here reflects well on the entire loan process. ValuDesk understands that the appraiser is often an extension of the lender’s service in the borrower’s eyes, so we make sure that communication is prompt and respectful.
Open Lines with the Client/AMC: Early on, it’s also important that the appraiser knows how to reach the client or AMC’s support if needed, and vice versa. Most AMCs provide contact info in the order. The appraiser should not hesitate to communicate proactively. As one AMC puts it, “Communication is an essential component of a successful working relationship… without clear and consistent communication – achievement of those goals is near impossible.”. If an issue arises (maybe the appraiser discovers when calling that the homeowner is out of town for a week, which will delay the inspection), informing the client quickly is key. Similarly, if the lender has an update (like the loan was cancelled or borrower rescheduled), they will inform the appraiser. Everyone stays in sync. This back-and-forth might involve simple status updates via an online portal or direct phone/email communication for more urgent matters.
Why do these early steps matter for a credible report? Because a well-initiated assignment means the appraiser can do their analysis with confidence and completeness. Any confusion or missing information at the start can lead to delays, omissions, or errors in the appraisal. For instance, imagine if an appraiser didn’t realize an important detail like the property is under contract for a sale – they might not analyze the contract or consider any special financing/concessions that could affect value. Or if they couldn’t get ahold of the occupant for a week, that pushes the timeline last-minute, potentially rushing the analysis. By handling order review and communication diligently from day one, the appraiser ensures the foundation of the assignment is solid. It sets the tone of professionalism: the lender/client sees the appraiser is on top of it, the homeowner feels the process is taken seriously, and the appraiser themselves has a clear roadmap ahead.
At ValuDesk, we’re trained on the importance of these early interactions. It’s part of our commitment to reliability and transparency. A smooth assignment process is not just about hitting a due date – it’s about fostering trust that the appraisal will be done right. When the groundwork is laid properly, the stage is set for the appraiser to do what they do best next: gathering data, inspecting the property, and developing the value opinion.
What’s Next? A Preview of Part 3
By now, we’ve moved from the moment an appraisal is ordered to the point where an appraiser is engaged and ready to begin the actual appraisal work. In Part 3 of our ValuDesk blog series, titled “From Street View to Bird’s Eye View – How Appraisers Gather Data,” we will follow the appraiser out into the field and beyond. How does an appraiser research and inspect a property? In the next installment, we’ll cover the on-site home inspection, neighborhood analysis, and the myriad data sources appraisers tap into – from public records and MLS listings to aerial imagery and industry databases. This upcoming part will illuminate how we go from observing the property at street level to analyzing market data from a bird’s eye view, all to arrive at a sound value conclusion.
