What is an Appraisal?
The act or process of developing an opinion of value. For most people’s understanding, it’s providing an estimate of the market value of the property.
How long does an appraisal take?
The site visit can take between 45 minutes to 1 hr and 30 minutes for a standard tract home depending upon size and amenities. The larger custom homes or residences on acreage can take longer depending upon the size of the home and lot size. I have been at some sites for 3 to 4 hours.
What does an appraiser look for when he/she comes to my property?
Depending upon the type of loan, or purpose of the report, will depend upon what the appraiser looks for on the property. Primarily, the appraiser is looking for the general condition of the home and site, as well as the quality of the amenities. In some instances, if it is a VA or FHA appraisal request, the appraiser will look for chipping and peeling paint (especially if the home is built prior to 1976 (FHA) or if it is a VA loan, any age home), exposed wiring, torn or loose carpet, missing appliances or non-operational appliances, double earthquake strapping on the hot water heater, Carbon Monoxide Detector, Smoke Detectors, room additions without permits, roof condition and water stains on the ceiling from current or past water leaks. The appraiser will be interested in reconditioning or remodeled items or rooms, including what type of flooring (tile, travertine, hardwood, laminate wood), recently painted house, type of counter tops (Formica, tile, quartz, granite or some other stone), front and rear landscaping, patio, covered patio, pool/spa, and/or view. Also the appraiser will look to see if the property backs or fronts to a busy road, is near electrical high voltage power lines, railroad tracks or if it near a landfill or agricultural farm (either dairy, row crops or horse).
What should I do before the appraiser comes to my home?
Usually dusting and vacuuming are not required, but most people want to put their best foot forward, so go ahead if you feel the need. Organize the best you can and remember that the appraiser will need access to every room in the house. If you have a roommate or child that likes to lock their door you will need a key for access. A helpful task for yourself and the appraiser is to make a written list of the amenities of the home, including but not limited to, The type of flooring, counter tops, appliances and cabinets. Go room by room and make a list of the upgrades or improvements that you have made in your home. Remember to list items that improve the real estate, not personal property items. If you were to move and take something with you, chances are that it is personal property and would not be valued by the appraiser so don’t include it in the list. If you have a doubt about what to include, go ahead and include it and the appraiser adjust the list to the items as needed. Upgraded bathroom or kitchen fixtures, recondition or remodeled kitchen and / or bathrooms, new FAU (heater) or AC condenser, gutters, irrigation lines, front/rear landscaping, patio, covered patio and/or pool/spa are all good items to list. While making your list try to remember when you completed those upgrades or changes. The approximate year of completion will help the appraiser. Under lending criteria, the appraiser should ask for that information, but just in case, be ready to provide the information if they don’t ask.
If you know for sure that a home sold in your area and it is either the same floor plan or similar, then give the address to the appraiser. They need to make sure that they have reviewed the whole market. You don’t need to be a real estate agent, but if you have some information share it with the appraiser. They will do their do diligence to confirm the information.
Can I follow the appraiser around the property?
Sure, but most appraisers prefer to do their work alone. Just remember the appraiser may have another job scheduled after yours and they need to be on time to that job as well. If you follow them around it may slow them down as you will typically ask questions or point out items of interest to you. I suggest you let the appraiser do their job first then ask your questions or point out your amenities prior to their departure. Even better, provide them with your written list of important items.
What can I talk to the appraiser about?
Anything is fair game except no questions that ask about the value of your home is and if your loan or sale price will be met. Also don’t ask what is your pool worth or how much is a view adjustment. If you do ask and you do not get an answer, it isn’t because the appraiser is being rude. I know you may be paying for the appraiser, but by law, appraisers can’t discuss the value of your home because you are not their client. Also since the appraiser may not have done their complete market analysis they couldn’t answer your question even if you were the client.
Am I the appraiser’s client?
If the appraiser is there for lending purposes then, you aren’t the client. You may pay for the appraisal, but that doesn’t make you the appraiser’s client. The appraiser’s client is the lender, not you. Federal Law is clear on this point. In a private party transaction, whoever hires the appraiser is the client (Attorney, Financial Planner, Real Estate Agent, Judge, Mediator, Trustee, Probate referee or individual).
I seem to pay a lot of money for an appraisal. The appraiser wasn’t here very long. Why do they charge so much?
Typically, the appraiser may be at your home for an hour, but they usually will spend 1 to 1.5 hours researching your home, looking at data in the MLS (Multiple Listing Service) and setting up the appraisal file. Next there is driving to the site, followed by driving the sale data that the appraiser will use in the report. This can take from 30 minutes to over an hour depending on the drive distance to the comparable sales. After that is completed, the appraiser drives back to the office, downloads all the information, finishes the sketch, photos and notes taken at the site. The appraiser has to write up the report, call and confirm the comparable sales being used and update the lender. If required, the appraiser will have to work on the cost data from a cost data service provider. Calculate land value and the building cost to replace the home new. This data goes into the Cost Approach section of the report. The final approach is the Income Approach. If the property is a rental property or 2 to 4 units, then the Income Approach may need to be completed.
Once the three approaches have been completed and reviewed, the appraiser finishes the summary section and adds in the final estimated market value. The report is then proof read once or twice, then the report goes through a computer review. Once that is done the report is put together by adding the forms required by the lender (plat map, zoning or flood map if required, location map, aerial map) Upon completion the report is uploaded into the appraisal system designated by the lender. Once the lender receives and reviews the report there may be questions for the appraiser. The appraiser may be contacted by the lender and requested to respond to questions asked by the processor, appraisal department, underwriter and senior review specialist. So the time the appraiser spends at your home is only a small portion of the total time that is required to complete a credible report.
Can I call the appraiser after he leaves my property for a status?
For a lending appraisal, I would suggest that you DON’T call the appraiser. I would recommend you call the lender and ask them the status or any question you may have. Calling the appraiser, after they have left your property, can usually be an issue. Normally the appraiser will only speak with the lender, since the lender is the client. If it is a non-lender assignment and (you hired the appraiser), then give them a call and discuss your question or issues.
What do I do if I don’t like the value?
Even though you may not like the value, make sure you read the appraisal report first before you start questioning the value. The report may point out some things that you weren’t aware of, or considered. In some situations, what the neighbor told you about sales in the area, may be more folk-lore rather than actual. The appraiser should have a better data source. If you think there is an issue, again, don’t call the appraiser; call your lender contact and discuss with them the issues and why you believe the value is incorrect. Also, make sure you have factual data to present. Your opinion, or that of someone else, isn’t going to help you much but do contact the lender with your comments. It is up to the lender to make the call to discuss issues with the appraiser, not you. If you hired the appraiser yourself (for a private party transaction, estate, probate, pre-listing, or family law), then call the appraiser and discuss with them their conclusions. Remember, you need factual data not an opinion to help your cause. If you are involved in a litigation case such as family law or bankruptcy and you hire the appraiser, I would be very careful in calling the appraiser to discuss value. It might give the appearance that you are trying to influence the potential expert witness and that might not be a good thing for your case. Talk with your attorney before you call the appraiser.
Are appraisers really people or should we be scared of them?
Yes, we would like to think we are (people that is)! The appraiser should treat you with courtesy and I would suggest that you do the same to them. It will really help the process. Don’t worry about the appraiser as they are there to do a job. The home in its current condition and the market data is what the appraiser is basing their review; you have absolutely no control over that part of the process, so don’t worry about the appraiser. If your home is typical for the area, you should be just fine, if not then there is nothing you can do at that point anyway. Remember not to get worried about things you can’t control. Get the data sheet together, present your home, be courteous and let the experienced certified residential appraiser do their work. You may be pleasantly surprised or at the very least you now understand the reality of the current market.
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