During an appraisal inspection the appraiser meets with either the homeowner or possibly the listing agent if it is a home that is under contract. Many times we are asked questions about the house and how the appraisal may come out and other times we are confronted with situations that effect how we perform our job. I thought I would share with you questions that I have been asked, or comments I have heard that makes the job of an appraiser very interesting, so let’s get started…
1) “We paid $20,000 for our addition, so our house should appraise for that much more, right?” Not necessarily. It really depends on what was done and what the market is willing to pay for it. Some areas may pay more for one thing over the other. The important thing to remember is that cost does not always equal value.
2) “You don’t have to use those foreclosure sales do you?” If foreclosure sales are a reflection of what is occurring in the market then they must be considered. This is especially true if there are foreclosure for sale at the current time, because they may indicate a trend. If normal, non foreclosure homes have sold since the older foreclosures did this may be a good sign and it may be possible to ignore them.
3) “If I clean my house up will it appraise higher?” An unmade bed or laundry on the floor is no reason to fret, however if by “clean my house up” you mean removing graffiti on the walls, steam cleaning stained and soiled carpet, or even repairing the damaged siding, that may be another matter.
4) “Here is a list of the 3 highest selling homes in the neighborhood, you can use them right?” Sometimes well meaning homeowners and real estate agents may provide sales they believe will help the value of their home, without knowing what criteria an appraiser is looking for. An appraiser has to look at many items when sifting through sales before arriving at the most appropriate properties to compare with the subject property. If I am given sales to consider I will definitely look at them, however I may not be able to use them. Appraiser utilize the process of bracketing sales which I wrote about in the past to help when choosing the best comparable sales.
5) Can you let me know if the home doesn’t appraise?” I can understand why an agent would want to know if a house was not going to appraise for its contract amount but the system does not allow for the appraiser to communicate with other parties to the transaction to discuss this because it could be construed as attempting to influence value. The best thing to do is to provide actual sales data up front that you used to price the home, and the appraiser will sift through this information and use it if it meets appraisal underwriter guidelines.
6) “You’re not going to kill the deal are you?” I can honestly say I don’t think any appraiser sets out to kill a deal by coming in lower than the contract price. What we are hired to do is to give our professional, non-biased opinion of the market value of the property based on what other homes have recently sold for (including pending sales) and are currently listed at. What sometimes happens is that a deal that was never viable (due to an unrealistic list price and contract price) from the start finally dies because the contract amount is not supported by market data.
7) “You don’t have to go into the basement do you”? This happened to me one time and made me wonder exactly why the homeowner did not want me to look in the basement. It turned out that they had been “storing” junk down there and had just started throwing it down there from the door leading to it from the main level. The appraiser has to view all areas of the home including the basement and if it is not accessible we have to complete the appraisal “subject to” everything being in proper condition, which typically requires an additional visit and extra cost to the homeowner. It’s always a good idea to make your entire house accessible to the appraiser so they can do their job.
8) “Is it o.k. if I hold my pit bull that just had puppies while you look at the inside of the house?” Well not really, I would rather it be in a crate. The owner of a home I was appraising recently was raising pit bull puppies and the mother dog had just had a litter, and needless to say was very protective. I had to measure the upstairs of the home with the thought in the back of my head that the dog was going to break free and attack me because it thought I meant harm to its puppies. My policy now is to ask that all dogs are either crated or in a secure area where they cannot bite.
Have you had any other experiences while appraising homes? I would like to hear what you have to say, just leave a comment below.