There are some things in the real estate industry that are constantly changing, actually – most things! With October 3rd bringing yet another new set of regulations & borrower forms, a raging seller’s market, volatile home prices and a looming Fed rate hike – anything is possible. But one thing is certain – your home will be appraised at least once in the time that you own it (and likely 3-5 times!). Everyone knows that an appraisal is key when you purchase a home, as the bank is not going to lend you more than it is worth! But you also have to get an appraisal when you refinance, and often during home-equity line applications and property tax appeals. Taking cash-out? That value is key in determining how much money you can receive, or what rate and program you may be eligible for.
While there is nothing I can tell you that will directly impact the market value of your home, there are a few things every homeowner should know about the appraisal process and the appraiser him/herself. Here goes…
First of all, unlike your loan officer or real estate agent – your appraiser is not working for you. Your appraiser is working for the bank, technically the appraisal management company that your bank chooses. And just like the banks, the appraisers got a pretty bad rap after the housing boom and bust, and are now under a more watchful eye than ever before. Increased regulations now require additional paperwork on the part of the appraiser…double the forms in fact, now making most appraisals at least 30 pages! Is it any wonder that residential appraisers are a shrinking population, already decreased by 10% since 2010?
Wondering exactly how appraisers are trained and assigned? It’s not by being a neighborhood expert – location has nothing to with it. Appraisers are designated in several different categories – trainees must complete a minimum of 75 hours of classroom training, licensed residential appraisers must complete 150 hours, and certified residential appraisers must complete 210 hours. Plus, they must get approved with several AMC’s (appraisal management companies) if they want to work with multiple banks – which means multiple background checks. Additional rules apply for FHA approved appraisers, and those allowed to appraise homes worth $1 million or more. All of these safeguards ultimately protect against fraud, but do very little to ensure the person valuing your home knows your neighborhood, your community and your individual home.
That’s where your job comes in when it comes to getting your home appraised. It is a balance between being your home’s advocate, and being an overly zealous property ‘watch dog’ during the visit. So here are a few Do’s & Don’ts that every appraiser will appreciate, and every home value can gain some accuracy from:
- Cleaning is important – but it isn’t everything. Yes, a home that is picked-up and recently dusted will present better than a messy, un-swept porch – but don’t go crazy. Do make sure the home does not look run down, and that its best features aren’t hidden under your son’s Lego collection. (By the way…please put the toilet lids down; you will thank me when you get the pictures back!)
- Do make a list and check it twice. Before the appraiser arrives, compile a list of all major home improvements and the year they were completed, as well as the age of the roof, the HVAC system and major appliances. Be sure to include any permits and the square footage of any addition.
- Do not assume a dollar for dollar return on any remodeling. $50,000 spent on that brand new kitchen rarely yields a $50,000 increase in your home’s value. A fraction of that may be utilized, and while it may not seem fair – it is the market norm. Set your expectations now.
- Do point out any recent comparables. If you know of some recent home sales that you feel are useful, feel free to make a list. But don’t expect the appraiser not to pull a few dozen of his/her own. Proximity in location, square footage, home condition and style will yield the most accurate results.
- Do mention what’s meaningful. That reputable blue ribbon, award winning school district you are in. The great new park nearby. The fact that your home is nestled between two amazing hiking trails. These are value-worthy facts. A new screen door or a new garbage disposal? Not so news-worthy in the appraisal world.
- Don’t follow the appraiser around. You may distract them…or worst case, aggravate them. The appraiser should leave when they are finished – not when they get tired of having a shadow…
I hope that this has been helpful – please check out the articles below for more information, including what to do if you think your home’s value was calculated incorrectly. That could be the topic of a future blog…so stay tuned and have a great week!
All the best,
Bobbi Decker & Associates fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. For more information, please visit: http://portal.hud.gov/