Three questions an appraiser will not answer during the appraisal inspection

Three questions an appraiser will not answer during the appraisal inspection

If you’ve ever tried to ask an appraiser any questions while they’re at your house you might agree that we can be aquestions appraisers won't answer little tight lipped about certain things. Not that we won’t answer any questions about the appraisal process and exactly what we’re looking for during the inspection, but beyond that there are certain things we are not at privilege to discuss. Today I thought I would not only tell you three questions an appraiser will not answer, but I also want to explain to you why.

What do you think my house is worth?

During the appraisal inspection the main objective for the appraiser is to collect all the physical data about your property. I’ve written in the past about exactly what appraisers look for during the inspection so I won’t focus on that here, but I will say that this is only the beginning of the process. At this point the appraiser  has no idea what your home may be worth because we still have to research sales and perform market analysis.

It’s not that we don’t want to tell you what your home is worth but because we haven’t completed all of the analysis it wouldn’t be fair to guess. We are sometimes able to do research before we go to your home to see if there  has been any sales activity in your neighborhood but it’s really not enough to give you a value. In addition, if we are doing the appraisal for a bank or mortgage company we are also subject to appraiser-client privilege, meaning that since we were hired by the lender they are our client and they are the only one we can communicate with about the value. The best thing for you to do would be to wait until we have finished the report and submitted it to our client, then you can get the value from them.

How big is my house?

To be honest, this is not information that we can’t give to you, however it’s usually not possible to do quick calculations and provide accurate square footage on the spot unless the appraiser does their sketch on a mobile device like some do. Either way this information is included in the appraisal report after we sketch out your home using a software program that calculates square footage area. When most people ask how much square footage their home has they usually want to know what the total area is, and more specifically how much is heated and cooled.

When performing an appraisal the appraiser has to list the above grade area separately from the below grade, or basement area. Most people think that they are not getting credit for this area because of this but that is not the case. In a previous post I explained  how basement area contributes value at a different rate than above grade area so it is not a good idea to combine the two. Whenever we compare your home to others we look at them the same way so that we are comparing apples to apples and can provide you with the most accurate estimate or opinion of value.

How much are you getting paid for this appraisal?

If you hire an appraiser directly this will not even be a question you’re concerned about, however if you are getting a mortgage for a refinance or a home purchase you may find yourself in this situation. Before the introduction of Appraisal Management Companies (AMC’s) several years ago the appraisal fee was pretty straight forward, however after AMC’s got involved the fee to the homeowner has increased. This is not because the appraiser is making more money, it is however the result of the cost of the management company being added to the overall fee. In fact many AMC’s are charging more for the appraisal and paying the appraiser less, which doesn’t make sense.

Appraisers are typically not at liberty to disclose the fee to the homeowner because there could be a misunderstanding or confusion as to why they were told one fee and the appraiser quoted another fee. Just keep in mind that if you have a question about the fee it should be directed to your loan officer or other contact person that you’re working with and they can fill you in on what all the fees are for.

Conclusion

I hope I have shed some light on three topics that may have confused you in the past. Have I left anything out? Is there something else you may have asked your appraiser that they were not able to answer? Please leave your question or comment below and I’ll do my best to answer it for you.

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Comments

  1. I get this question about 1 out 5 appraisal that I do. By the way, the lender told us to tell you that we need $______________ to be able to get this loan to work. Talk about being in a tight spot. How would you respond?

    • Yep, I’ve heard that too Hugh. I usually say that the value I arrive at will be based on what other similar properties have recently sold for and what active properties are currently listed at. I can’t promise any value. I like how the lender probably didn’t want to put a value on the order for fear of getting in trouble but told the owner to pass that along. Thanks for sharing.

  2. Nice job keeping it simple Tom. The question that I do not like getting on an inspection is, do you think my house is worth _____? I know that is just a variation on your first question. However, the problem is that when the homeowner gives me a specific number and the appraiser happens to come in at that number, it will look suspicious or like the appraiser was bias.

    • That is so true Gary. I hate that too because I do not want it to look like I came in at that number just because they wanted it. As you and I know there is much more to the process than that. Thanks for bringing this point up.

  3. I get asked the first question all the time. I always say, “The inspection is the easy part. It’s the tip of the iceberg so to speak. Now I have to go back to my office and invest much time and research to figure this out”.

    • Same here Ryan. Most people think that the time we spend at their house is all there is to it and that we go back to the office and inform our client that 123 Main Street is worth $100,000. I had one homeowner remark to me that he wish he could get paid as much as we get for as little work, but I quickly filled him in on the entire process. I think that part of our job is informing everyone what the entire process is so they understand it more.

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