What is a Tidewater Appraisal?
I learned this week for the first time about the Tidewater Appraisal Initiative and after talking to many other industry professionals unfamiliar with the term, thought it best to share. No, it has nothing to do with “Tidewaters” or flood zones.
Yesterday I received this email from the buyer’s lender on one of my listings, two days before closing:
“We have just received notification from the appraiser that a TIDEWATER has been issued. What this means is based on his initial review and findings that the house is not going to appraise for the Sales Price. At this point, the appraiser does not release his value until the following process has been completed:
The listing agent needs to supply a list of comparables that she feels will support the sales price listed on the contract to the appraiser immediately. Once received, he will review all the findings and then release the appraisal and value. If the agent does not provide those within a timely manner then the appraiser will issue his findings with no opportunity to challenge it.”
I had never heard this term before, so I asked my escrow provider, Broker, and some other agents. None of us knew what the slang term meant. I called the lender and said I had not heard of this, but was most confused because I had met the appraiser at the property and provided him with comps at the appraisal appointment.
The Tidewater Appraisal Initiative gives the point of contact (the Underwriter) the opportunity to challenge an appraisal if the appraiser thinks the appraisal will come in under the sales price. Obviously, the appraiser must think there is a chance they are wrong – why else would the ask for help? They cannot reveal the appraised amount, only that they are soliciting accurate comparables to support the sales price.
This made me nervous. It flies in the face of the standard that we cannot influence the appraiser regarding value in any way.
Here’s what I learned in my research:
The Tidewater procedure allows an opportunity for a designated Point of Contact to provide market evidence for the appraiser’s consideration prior to establishing the final appraised value.
The Tidewater process has been in existence since 2003, but was just re-affirmed by VA on 7/19/2017. This was updated in the VA circular 26-17-18 which describes procedures for improving communication with appraisers. So the main purpose of this procedure is to allow and improve the communication during the VA appraisal process.
Additionally, since the Tidewater Initiative happens prior to finalizing the appraisal report, it limits the amount of requests for appraisal rebuttals. Conversely, appraisal rebuttals occur after the appraisal is turned in. So, at least Tidewater gives interested parties an opportunity to provide information prior to appraisal.
Hopefully this has provided helpful information to better understand the Tidewater process. Good advice is to allow extra time and to order the appraisal early on VA purchases.