Monday, November 12, 2012

Ask the home appraiser

Have you been curious about some of the finer points of home appraisals? I have -- and although I deal with them all the time, things change.  My office recently brought in an appraiser to speak, and here are some of the more pertinent questions and answers.  Remember, these answers were given for a Realtor's perspective.  The comments in italics are mine.

  • Is there a difference between independent appraisers and bank approved appraisers? How do you get to be an approved appraiser? Answer: Banks get their appraisers from appraisal management companies.  For an appraiser to get approved he has to submit a resume package like anyone else looking for a job.
  • What do you do if you get what you consider an undeserved bad appraisal? Should you challenge it with comparables or demand another appraisal? Answer: It is very much better to challenge it with your own comparables.  The management company will ask the appraiser to respond and defind his values.  (Personally, I always give an appraiser comparables before the actual appraisal.)
  • On second appraisals (often done if there is a value question), does the 2nd appraiser know what the 1st appraiser came in at? No.
  • How much does an appraiser credit a house for on the following? Answer: extra bedroom $5-10,000; extra bathroom $5-10,000, pool $10-15,000 (except in Beverly Hills, where it's $50,000 (the extra bedroom credit is much lower than I had previously thought).
  • How do you define baths? What does it have to have? Answer: 1/4 bath means sink only, 1/2 bath means sink and toilet, 3/4 bath and full bath are the same for valuation purposes and mean shower and/or tub, sink and toilet.
  • Under what circumstances does a convertible den count as a bedroom, assuming there is a closet? Answer: If it has a closet it counts as a bedroom if it is larger than 80 square feet.
  • When looking for comps, would an appraiser extend the radius of surrounding comparables or would the appraiser go back further than 90 days. Answer: The appraiser would extend the mile radius.  He would NOT go back more than 90 days.
  • What is the value of "multiple offers" on a property to the appraiser? For the appraised value, only the closed sales figures can be used.  Actives and Pendings are important for the appraiser to note on the appraisal as a matter of interest for the big picture and to see how the neighborhood is trending.
  • Can you use new construction as a comp for non-new construction? Answer: no.
  • Can you use non-new construction as a comp for new construction? Answer: yes, with an adjustment for the age value.
  • What about a total remodel? Answer: No, you cannot use new construction as a comparable.
  • Can you count unpermitted structures, unpermitted work, or unpermitted useage or square footage in the value? Answer: No.  All the appraiser can note is that the work was done in a workman-like manner and there is no health hazard.
  • What can a seller do to make the property the most appealing? Answer: Appraisers are now required to take a picture of every room, so sellers should prepare the house as if they were having it must look as good as possible for the appraiser.

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