What Information Goes to Your Appraiser
Your lender must give the appraiser a complete picture of your transaction before they can value your home. This isn't optional paperwork — Fannie Mae requires specific disclosures to ensure accurate appraisals.
The appraiser gets your entire sales contract, not just the purchase price. This includes every financing detail: your down payment amount, any seller concessions, gift funds from family, and financing terms. If you're buying new construction, the contract must show the base price plus itemized options.
Say you're buying a $400,000 home with the seller paying $8,000 toward your closing costs. The appraiser needs to know about that concession because it affects how they analyze comparable sales. A home that sold for $400,000 with no concessions isn't the same as yours.
The lender also discloses any relationship between you and the seller. If you're buying from a family member, business partner, or anyone you know personally, the appraiser must factor that into their analysis. Related-party sales often don't reflect true market value.
Required Documents for the Appraiser
Your lender gathers specific paperwork before ordering the appraisal:
- Complete legal property description
- Signed sales contract with all amendments
- Property tax records and legal documents
- Income and expense statements (for rental properties)
- Property leases (for rental properties)
- Ground lease documents (for leasehold properties)
- Energy efficiency reports when available
For investment properties, the appraiser needs rental income documentation. Your lender provides current leases and income statements showing what the property actually generates in rent. This helps the appraiser determine if the rental income supports the property value.
If you're buying a condo or townhome on leased land, the ground lease goes to the appraiser. These arrangements affect property value since you own the building but not the land underneath.
When Contract Changes Trigger New Appraisals
Most contract modifications don't require updated appraisals. Price changes, financing adjustments, and closing date revisions typically don't affect the appraisal process.
But physical changes to the property do matter. If you negotiate for the seller to complete additional repairs, add fixtures, or modify the home's condition, your lender may need a new appraisal. The appraiser originally valued the property in its previous condition.
Consider this scenario: Your inspection reveals roof damage, and you negotiate for the seller to install a new roof before closing. Since this materially changes the property's condition, your lender might order an updated appraisal to reflect the improvement.
Environmental Hazard Disclosures
Your lender must tell you about known environmental problems that could affect your property's value or safety. This goes beyond what's in your sales contract or inspection report.
Environmental hazards include contaminated soil, underground storage tanks, nearby industrial pollution, or hazardous materials in the home itself. If your lender discovers these issues during underwriting, they must disclose them to you before closing.
The disclosure requirement continues until you sign your loan documents. If new environmental information surfaces during the loan process, your lender must share it immediately. You have the right to know about anything that could affect your property's value or your family's safety.
Why These Rules Exist
Fannie Mae requires complete information sharing to prevent appraisal manipulation and protect borrowers from hidden problems. Appraisers need all transaction details to provide accurate valuations that reflect true market conditions.
Incomplete information leads to flawed appraisals. If an appraiser doesn't know about seller concessions, they might overvalue the property by comparing it to sales without concessions. This creates artificial equity that doesn't really exist.
The environmental disclosure rules protect you from buying contaminated property unknowingly. Lenders have access to databases and reports that individual buyers typically don't see. These disclosures help you make informed decisions about your purchase.
Common Issues That Complicate the Process
Related-party transactions often face additional scrutiny. If you're buying from family, expect the appraiser to pay extra attention to comparable sales and market conditions. The appraisal process may take longer as they verify the sale reflects fair market value.
Investment property appraisals become complex when rental income varies significantly from market rates. If you're buying a property with below-market rents, the appraiser must determine whether those rents represent the property's true income potential.
New construction purchases sometimes hit snags when builders modify standard features or pricing after contract signing. If your builder changes materials, layouts, or included features, the appraiser needs updated information to value the home accurately.
Environmental issues discovered late in the process can derail transactions. If contamination or hazardous materials surface during underwriting, you may need additional inspections, remediation estimates, or specialized appraisals before your lender can approve the loan.
References
For the official guidelines, see 5603.3: Information supplied to the appraiser and Borrower in the Fannie Mae Selling Guide.
Mortgage guidelines change. Stay current.
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Original Freddie Mac Guideline Text
This section contains requirements related to:
(a)
Information supplied to the appraiser
For each appraisal report request, the Seller, or an authorized third party, must provide the appraiser with the following information about the subject property:
The complete legal description (refer to
)
The complete sales contract for purchase transactions, including:
Financing terms
Financing and sales concessions granted by anyone associated with the transaction, and
Any gifts, buydowns or Down Payment assistance provided by anyone on behalf of the Borrowers
Note: For new construction, the sales contract should state the base price of the house and itemize each option.
The Seller is not required to provide the appraiser with an updated sales contract unless the updated terms impact the physical description or condition of the property. In such cases, the Seller must obtain an updated appraisal report for the property. Changes to the sales contract that are not required to be provided to the appraiser include, but are not limited to:
Changes to the transaction terms such as sales price, financing or sale concessions, and
Date revisions, corrections to typographical errors, etc.
Any known affiliation between the property seller and the purchaser
Income and expense statements and property leases
Generally acceptable energy reports such as the Home Energy Rating System report and U.S. Department of Energy Home Energy Score report, if applicable
Ground Lease for leasehold properties (refer to
)
Any other information known to the Seller that could adversely affect the market value, condition or marketability of the subject property, including the existence of any Contaminated Site, Hazardous Substance or other adverse condition that affects the subject property or the Neighborhood in which the subject property is located (refer to
)
(b)
Information supplied to the Borrower
For purchase transactions, the Seller must provide the Borrower with information regarding environmental hazards that directly impact the subject property and have not been mitigated or remediated, unless the Borrower already has notice of such hazard(s) through the purchase contract or property inspection.
If at any time before the Note Date the Seller becomes aware of a hazard that adversely affects the market value, condition or marketability of the subject property, including the existence of a Contaminated Site, Hazardous Substance or other environmental condition that has not been mitigated or remediated, the Seller must disclose to the Borrower all information known to the Seller about the hazard.
