What buyers and sellers in Manchester should know

Home Appraisals in Tennessee

If a buyer is using a loan, the appraisal is one of the biggest moments between an accepted offer and closing. It can confirm the price you agreed on, or it can send everyone back to the table. This guide explains how appraisals work for buyers and sellers in Manchester and the rest of Coffee County, what your rights are, and what you can do if the number comes in low.

Everything here comes from federal agencies, the loan programs themselves and the Tennessee Real Estate Appraiser Commission. Rules change and every loan is different, so confirm the details with your lender. This is general information, not legal or lending advice.

What an appraisal is

The CFPB describes an appraisal as a written document that shows an opinion of how much a property is worth. It describes what makes the home valuable and may show how it compares to other properties in the neighborhood. The OCC adds that an appraisal is prepared by a licensed or certified appraiser and must follow the Uniform Standards of Professional Appraisal Practice, and that it is an opinion of market value as of a specific date.

Three things are often confused with an appraisal:

A home value report or CMA from an agent. That is an opinion meant to help you plan and price, not an appraisal. See what is my Manchester home worth.
A home inspection. The NCUA explains that the appraiser works for the lender, while a home inspector works for the buyer to find out what condition the home is really in. My home inspection guide covers what Tennessee requires of inspectors.
The property tax appraisal. The county assessor sets an appraised value for tax purposes on its own schedule. My Coffee County property tax guide explains how that works.

Who orders it and who pays

When you borrow to buy or refinance, the CFPB says your lender may need a new appraisal and may require you to pay for it. The FDIC says the lender typically orders the appraisal and the buyer pays the cost as part of the financing process. The appraisal shows up on your Loan Estimate as a service the lender requires and chooses; my buyer closing costs guide explains that form.

The FDIC also notes that lenders use the appraisal for more than approval. It can affect your interest rate and the down payment the lender requires, because the lender compares the value to the loan amount.

Some conventional loans may not need a traditional appraisal at all. Fannie Mae's Selling Guide says its underwriting system offers value acceptance for certain loan files, in which case an appraisal is not required, and that the lender must still order one when the law requires it or the lender believes one is warranted. Your lender will tell you which applies.

Nobody may pressure the appraiser

Federal rules protect the appraiser's independent judgment. For a loan secured by your principal dwelling, 12 CFR 1026.42 says lenders and settlement service providers may not try to cause the value to be based on anything other than the appraiser's own judgment, through coercion, bribery, intimidation, instruction or collusion. Examples in the rule include trying to get an appraiser to report a minimum or maximum value, and paying the appraiser only if the loan closes.

What everyone can do is make sure the appraiser has accurate facts. If you are selling, I can have a list of updates and recent improvements ready, and the right way to raise anything after the report is through the buyer's lender, which is covered below.

Your right to a free copy

The Equal Credit Opportunity Act Valuations Rule, at 12 CFR 1002.14, covers loans secured by a first lien on a dwelling. It says the lender must:

Tell you about the right. The lender must send a written notice of your right to a copy no later than the third business day after it receives your application.
Send the copy on time. Each appraisal and written valuation must be provided promptly upon completion or three business days before closing, whichever is earlier. You may waive that timing and agree to receive it at or before closing.
Not charge for the copy. The lender may charge a reasonable fee for the appraisal itself, but not for giving you a copy.

The rule applies whether the loan is approved, denied, withdrawn or incomplete, and the copy can be sent electronically. Read your copy as soon as it arrives. If something looks wrong, the earlier you speak up, the more time there is to fix it before closing.

FHA appraisals

An FHA appraisal checks condition as well as value. HUD Handbook 4000.1 says the appraiser must report whether the home meets HUD's Minimum Property Requirements, which HUD describes as general requirements that every FHA insured home be safe, sound and secure. My FHA loan guide explains what happens when an appraiser reports defects.

Two more FHA rules are worth knowing:

The amendatory clause. If the buyer has not received FHA's statement of appraised value before signing the contract, the handbook requires the contract to include an amendatory clause. In that clause, the buyer is not obligated to complete the purchase or lose earnest money unless the appraised value is at least the contract price, and the buyer may choose to go ahead anyway. The clause also says HUD does not warrant the value or condition of the home.
How long it is good for. The handbook says the initial FHA appraisal is valid for 180 days from its effective date, and an appraisal update can extend that to one year after the effective date of the original report.

VA appraisals and the Notice of Value

For a VA loan, the lender arranges for a VA appraiser to make sure the home meets VA's Minimum Property Requirements and to provide a Notice of Value, according to VA's quick reference for real estate professionals. If the home does not meet a requirement, VA says to talk with the lender about whether a waiver is possible.

VA also has a step called the Tidewater process. If the appraiser is concerned the home may not appraise at or above the contract price, the appraiser contacts the point of contact on the appraisal order so they can send additional sales data before the appraisal is finished. VA says the appraiser cannot discuss the expected value during this step. My VA loan guide covers the rest of the VA process, and the USDA loan guide and THDA guide cover other loan options. Ask your lender how the appraisal works for the loan you choose.

If the appraisal comes in low

A low appraisal does not automatically end the sale. VA's quick reference lists three options when the value does not support the loan, and they are a good map for most loans:

Ask for a reconsideration of value. The OCC says only your lender may request a reconsideration of value from the appraiser on your behalf, so start by asking your lender for its process.
Renegotiate the price with the seller to match the appraised value.
Pay the difference between the appraised value and the contract price in cash at closing.

What happens next also depends on your purchase contract, including any appraisal or financing terms and deadlines. Read it closely, ask me to walk through it with you, and talk with a Tennessee attorney if you have legal questions. My earnest money guide explains when a deposit is usually at risk.

How to ask for a reconsideration of value

The FDIC suggests asking your lender early in the process whether it has a reconsideration of value process and what it needs. The CFPB says borrowers can point out factual errors or omissions, comparable sales that do not fit, or evidence that the appraisal was influenced by prohibited bias. The FDIC lists the kinds of facts that help:

A plat map to correct the lot size
Measurements of the home to correct the living area
Photos of updates or improvements, with receipts for materials and labor
A list of similar nearby homes that sold within the past 12 months, with their sale prices

Federal banking agencies' 2024 guidance describes a reconsideration of value as a request from the lender to the appraiser to reassess the report based on possible problems or new information that may affect the value. Stick to facts the appraiser may have missed. I can help pull together comparable sales from the MLS for your lender.

What sellers should know

The NCUA notes that sellers typically do not receive a copy of the appraisal, but a seller can ask the buyer whether they are willing to share it. To help your sale go smoothly:

Price from real comparable sales. My how to sell a house guide explains how we set the price together.
Make the home easy to get into and walk through on the day of the appraisal.
Have a list ready of updates and repairs with dates, plus any permits, surveys or plats you have.
Know your options before you sign. When we review offers, I will point out the appraisal and financing terms so you know what happens if the value comes in under the price. My seller closing costs guide helps you estimate your net either way.

Appraisal bias and fair housing

The NCUA says the Fair Housing Act and the Equal Credit Opportunity Act prohibit discrimination in the home appraisal process, and that not every low appraisal is due to discrimination. If you believe an appraiser discriminated against you, the NCUA points to the Appraisal Complaint National Hotline at 1 877 739 0096, which refers you to the right agency. You can also file a fair housing complaint with HUD at 800 669 9777, or a complaint about your lender with the CFPB at (855) 411 2372.

Fair housing laws protect every buyer and seller, and I work with every client the same way.

How to check a Tennessee appraiser's license

The Tennessee Real Estate Appraiser Commission regulates real estate appraisers in the state, and the licensing rules are in Tennessee Code Annotated Title 62, Chapter 39. To check an appraiser:

Use the state's Verify Public Search, which shows license status, expiration dates and public disciplinary actions and is updated daily.
Check the Appraisal Subcommittee's National Registry, which lists appraisers authorized by a state for federally related transactions.
If you suspect misconduct, the Commission has a complaint page. The Commission says it cannot give legal advice or get refunds, and its role is limited to discipline against a license. You can reach it at (615) 741 1831.

Appraisal steps at a glance

1. Get preapproved and ask your lender how it handles appraisals and reconsiderations of value.

2. Write your offer with clear appraisal and financing terms. My step by step buying guide shows where the appraisal fits.

3. Schedule your own home inspection. The appraisal is not an inspection.

4. Watch for your copy of the appraisal and read it right away.

5. If the value is low, talk with your lender and me about a reconsideration, a new price or covering the difference.

6. Keep my home buyer checklist and real estate glossary handy.

Keep reading:

Buying or selling in Manchester?

I help buyers and sellers in Manchester and across Coffee County keep the appraisal, inspection and closing on track. Call or text me at (615) 497 1658, or request my buyer guide below and tell me what you are looking for.

Common questions

Who pays for a home appraisal in Tennessee?

Usually the buyer. The CFPB says a lender may require you to pay for the appraisal when you borrow to buy a home, and the FDIC says the lender typically orders it and the buyer pays as part of the financing. Your Loan Estimate lists it as a service the lender requires.

Do I get a copy of my appraisal?

Yes, for a loan secured by a first lien on your home. Under 12 CFR 1002.14, the lender must give you a free copy promptly upon completion or three business days before closing, whichever is earlier, unless you waive that timing.

What happens if the appraisal is lower than the price?

VA lists three options that fit most loans: ask your lender for a reconsideration of value, renegotiate the price with the seller, or pay the difference at closing. Your purchase contract also matters, and FHA contracts include an amendatory clause about the appraised value.

Can I challenge a low appraisal?

You can ask your lender for a reconsideration of value. The OCC says only the lender may request one from the appraiser. Bring facts such as a corrected lot size or living area, photos and receipts for improvements, or similar nearby sales the appraiser did not use.

Is an appraisal the same as a home inspection?

No. The NCUA explains that the appraiser works for the lender to estimate value, while a home inspector works for the buyer to check the condition of the home. VA does not require an inspection but encourages one, and HUD tells FHA buyers to get one.

How do I check if a Tennessee appraiser is licensed?

Use the Tennessee Department of Commerce and Insurance Verify Public Search, which shows license status, expiration dates and public discipline. The Tennessee Real Estate Appraiser Commission regulates appraisers and accepts complaints, and the Appraisal Subcommittee keeps a National Registry.

Matt Sargent is a Tennessee licensed affiliate broker with Keller Williams who helps buyers and sellers in Manchester and Coffee County. Call (615) 497 1658 or send a message.