Common Questions Agents Ask The Appraiser

Confused About Appraisals? Check Out These 11 Common Questions Agents Ask The Appraiser

Questions Agents Ask AppraisersThis week I thought I would take a look at some of the questions I get asked by real estate agents. I hope that the answers that I have included here will help other agents as well. If you have a question that is not here please let me know and I would be glad to answer it for you.

1) Do I need to be at the house when you are appraising it?- It is not absolutely necessary for the agent to be at the house at the same time as the appraiser. The appraiser will be able to do their job if you are not there, however, there are some positive benefits if you are there. These include the following:

  • If the appraiser has any questions they can ask them and get an immediate answer thereby saving time on phone calls.
  • If the agent has an information packet they can provide that to the appraiser. The information packet can contain a list of updates and renovations the home has had, comparables used in the CMA as well as any specific information about the home that was used to arrive at a list price.
  • Of course, you can also provide this information by email and answer questions over the phone but when you meet in person you are able to make a personal business connection and be a resource for one another in the future.

2) Can I provide you with comps?- If a CMA has been performed I highly recommend making that available to the appraiser. As I noted previously this can be included in the property information packet.

Some appraisers may not accept the information but I think agents should still offer it to them. It helps the appraiser understand where the agent was coming from when they listed the home.

The appraiser will need to vet the information and qualify the comps but it may give them additional information to consider in the valuation.

Click Here To Read More About Communicating With The Appraiser

3) Do basements add value?- Basements do add value but most people get confused about this when reading the appraisal report. Because a basement is considered below-grade area it has to be listed separately from the above grade living area.

ANSI standards state that if any part of the house is below grade then it is classified as basement area and that is why it is not included with the other living area. This below-grade living area typically contributes less value than the above grade but it does contribute value.

When choosing comps for homes with a finished basement I always recommend using sales that also have finished basement area. This way you do not have to adjust for the basement difference.

Click Here To Read More About How Basements Add Value To A Home

4) Does the house need to be clean?- This is one of the top questions I get. Most people are worried that a messy house will negatively affect its value.

A messy house will not hurt the value of your home if it is just a matter of unmade beds, dirty dishes or laundry that needs to be put up. If a messy home consists of damage to the structure of the home this could result in a lower value.

This is typically not the case, however, so most people should rest assured that if you cannot pick up the laundry before the appraiser comes you should be okay. Just keep in mind that the main thing the appraiser looks at is the structure of the home.

Click Here To Read More About Clean Houses And Appraisals

5) How far away can I look for comps?- While it is preferable to have comparables from the subject’s subdivision it is not an absolute necessity. When choosing comps those that are located within the neighborhood will naturally reflect the local market but it is also possible to get the same result by choosing sales from other competitive market areas.

A competitive market area is one that a buyer would look in if there were no homes for sale in the subject’s neighborhood. They have homes that are similar in age, style, quality, and appeal as well as being located in the same or similar municipality.

Homes that are in a competitive market area may not be within a one-mile radius but they can still provide an accurate indication of value. Remember this when you cannot find any recent sales in the immediate area as it can provide you with sales when you don’t think there are any.

Click Here To Get Tips For Choosing Comps

6) Do you have to use the recent foreclosure sale that just occurred down the street?- It is possible to overlook foreclosure sales but you have to consider other factors when making this decision.

Foreclosures should be considered if they are predominant in the area and are reflective of what is occurring in the market. After the recession occurred around 2007 the majority of closed sales and active listings were foreclosure or short sale properties.

Because they made up such a large part of the housing inventory it was hard not to consider them. Contrast that with how things are now and the market has flipped.

The market has now normalized and there are more arm’s length sales and foreclosures are rare, so they don’t necessarily have to be given much emphasis, however, they should be noted.

7) Can the seller be at the house when you are appraising it?- I have sometimes been asked this by an agent when I am setting up the appraisal appointment. It is okay for the seller to be at the house, and in fact, I prefer it.

The reason I like for the seller to be at the house is because most of the time I have questions that they can answer for me. It is important to know what updates or renovations the home has had and who better to ask than the owner?

The owner can provide valuable information about their house as well as answer any questions about the neighborhood. They can provide feedback as to what some of the positive features of the neighborhood are and selling points for the area.

Some appraisers may feel differently, however, I am always open to as much information as I can get. I can then use that information to produce a more accurate appraisal report.

Click Here To Read More About The Seller Being At The Home During The Inspection 

8) Why do you need a copy of the sales contract?- Appraisers are required to analyze any contract that may exist on the subject property.

The appraiser looks at the contract to determine various things including loan interest rate, down payment, seller contributions, and extras that might be included in the sale. If the interest rate is lower than what is typical to entice the buyer to purchase the home, this may have resulted in a higher sales price.

Or, what if there was lawn equipment included in the sale of a home that would be helpful in maintaining the property? The value of the equipment would have to be adjusted for in the appraisal since this is not typical, and it does not reflect cash equivalency.

Sometimes sellers will help the buyer by contributing more to closing costs because the buyer does not have the funds. This has to be analyzed and adjusted for or it will give an inaccurate indication of value for the subject property.

The terms of the contract are checked against what is typical in the market, and if it varies adjustments are made. This is done so that the adjusted value of the subject property is not overstated or understated. So as you can see, it is more than just looking at the contract price. It involves taking a very close look a the terms of sale and comparing it to what is typical in the market.

Click Here To Read More About Why The Appraiser Needs To Look At The Contract

9) What is the price per square foot for homes in the area?- This is a common question because it is one of the most well-known metrics in home sales. People like to know this because then they can multiply it by the square footage of their home and BAM! they’ve got their home’s value.

In reality, it is not that easy. When you only look at the price per square foot metric you don’t take into consideration variations in the type of properties that are in a neighborhood.

There are some situations where the price per square foot can be helpful but if your home does not fit into this situation it can give you inaccurate results. This can result in either over or underpricing your home which can adversely affect a refinance or sale of your home.

Click Here To Read More About Price Per Square Foot

10) Does a bedroom have to have a closet?- I get this question frequently with the latest time being a couple of weeks ago. The answer can vary depending on the home, its age, and the market it is in.

Generally speaking, a bedroom should have a closet in it. If you look at current home construction you will most likely see closets being built in the rooms that are designated as bedrooms because that is what the market expects.

It becomes a gray area whenever the home is older because some homes built 75 to 100 years ago may not have had closets and if this was the case you really cannot say that the house has no bedrooms. When this is the case you need to look at what is being done to these homes when they are bought or renovated.

If closets are being built to accommodate market demand then that is a good indication that the bedrooms should have a closet. On the other hand, if the rooms are being left without closets during renovation then that will be a good indication that it doesn’t matter to buyers.

With this being said I would bet that the majority of older homes that are being renovated are having closets added, however, there’s always the outlier areas where this may not be the case.

11) Does the house have to be completed before you do the appraisal?- It makes sense that the home should be complete because how else would the appraiser be able to observe and measure it? Well, it turns out that that is not necessarily the case.

If the appraiser has a set of detailed plans and specifications for what is going to be built or renovated then it is possible for the appraiser to use these documents to describe what the house will be like after it is built.

These types of appraisals are commonly referred to as “subject to appraisals” because the value given is subject to the home being built or renovated per the specifications given. If the specs change then the appraisal would not be valid.

As I noted, these types of appraisals are typically used whenever someone wants to borrow money to build a house or make renovations to an existing home. The bank would utilize the appraisal to determine the value of the home after the work is done so that they can determine how much to lend.

Click Here To Read More About Subject To Appraisals


I hope this post has been helpful in understanding some of the common questions agents ask the appraiser. If you have a question that I did not include feel free to contact me and I’d be glad to answer it for you. As always, thanks for reading.

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  1. Mike Coyle says

    Nice post Tom. I think you hit all the major questions. Thanks!

  2. Great FAQ especially coming from you as the appraiser. I do have a question when it comes to Sq.Ft. I see appraisals where the adjustments being made for both bedrooms and Sq.ft. for the same property.

    • Thanks for the question, Petra. You have two things you are looking at here. The first is the actual square footage differences. Larger homes typically sell for more so, of course, an adjustment has to be made for size differences. The second thing to consider is the differences in functionality. If a home has more bedrooms it is more functional and there can be price differences for this. So a home might sell for more because it has an extra bedroom but that value increase may be split between the square footage and the extra functionality of the additional bedroom.

  3. Nice job Tom. You hit so many common questions here.

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