Study Finds Borrowers Favor Appraisal Experience Over Cost

According to a new study from Regorra, the results of its 2022 borrower experience survey details the importance of the appraisal with the overall borrower satisfaction during the lending process.

The survey revealed that borrowers care significantly about a positive experience during the appraisal portion of the loan process; appraisal timeliness (quick completion), the accuracy of the appraisal (no revisions needed), and communication/transparency during the process were ranked as the most important factors with an appraisal.

Key Findings:

• More than 1,000 borrowers were surveyed to evaluate borrower attitudes toward the mortgage lending process.
• Only interest rate ranked higher than the relationship with their loan officer when choosing a lender.
• Significantly more borrowers prioritize quick, quality reports ahead of the cost of the appraisal.

Surprisingly, borrowers ranked the price of the appraisal as their least important factor when it comes to the appraisal. Borrowers understand the importance of the appraisal, and it is a cost that must be incurred. Getting it right the first time is worth the money that they pay.

"During the appraisal process, lack of visibility for borrowers puts lenders at high risk of dropping their NPS or even losing the deal," Mike Seminari, STRATMOR Group's director of customer experience, said. "With volume down and lenders finally getting a moment to catch their breath, now is an ideal time to work towards alleviating the inefficiency, lack of visibility, and overall lack of control that is so often associated with the appraisal process."

1. 1,008 borrowers responded to the survey, asking four questions:
   • Was the cost of an appraisal a consideration when choosing your lender? (Yes/No)
   • Would you be willing to pay more for your appraisal if it meant getting it back faster? (Yes/No)
   • When thinking about the appraisal process, which of these is most important to you? (Single choice)
   • When choosing your lender, which of these was the most important factor? (Single choice)
2. After the interest rate, the majority of borrowers selected lenders based on their perception of the LO or lender.

Following interest rate (64.4% of responses), either relationship with a loan officer or lender reputation (26.2% of responses) were deemed to be the "most important factor when choosing a lender." Closing costs (5.7% of responses) and special loan considerations (3.7% of responses) were deemed the least important factors.

Borrowers want quick, quality appraisals, and are not price-sensitive.

Quick completion (45.5% of responses) and quality of the appraisal (27.8% of responses) were deemed the "most important about the appraisal process." Communication and transparency (14.7% of responses) of the process ranked ahead of appraiser professionalism (6.2% of responses). The cost of the appraisal (5.8% of responses) was ranked last.

An overwhelming majority of borrowers (815 respondents) said "the cost of an appraisal was not a consideration when choosing a lender."

When asked if the cost of the appraisal was a consideration when choosing a lender, the vast majority of the 1,008 respondents answered: "no" (80.9% of responses), while nearly 1-in-5 responded "yes" (19.1% of responses). This indicates that lender staff who believe lower appraisal fees should be prioritized over other key appraisal metrics may be incorrect in their assumptions.

"The message from borrowers is clear. Lenders need to focus on projects that make for a high-quality customer experience," Brian Zitin, CEO and co-founder of Reggora, said. "Reggora does exactly that for the appraisal, improving the process for everyone involved. And what's especially important for lenders in this market, it's not a big investment to get it up and running."

To read the full report, including more data and methodology, click here.