Property Appraisals for Mortgages (for your homeowner / refi clients)
Applying for a mortgage to purchase a new home or seeking to refinance your existing mortgage can be a tedious process. One of the requirements of these two procedures is the appraisal, which is basically a detailed report which determines the overall value of your home after considering a number of valuation factors. The appraisal is conducted by a licensed appraiser who will be assigned by the bank or the lending institution. The loan officers (and mortgage department) is prohibited in pretty much all cases to communicate directly with the appraiser. Management on both sides of these 2 entities schedules, reviews and delivers the appraisal once it is complete.
Factors that an Appraiser Considers
An appraiser is going to consider factors such as the overall condition of the home, the size of the property lot and that of the home. The number of rooms, bedrooms, and bathrooms, and the quality of landscaping. The appraisal will also include the number of fireplaces (if any), an addition of a swimming pool, the quality of finishing details, and the quality of light in the home, and the view. There is not a real need to clean and make your home "spotless," although you might as well tidy it up if you have the time. The appraiser who is randomly selected by the bank or lending agency will research the recently sold properties in the area which are similar to yours, and are known as a “comparable.”The appraiser will also consider the location of your home before arriving at an estimate of your home’s value.
Tips to Boost Your Home’s Appraisal Value
1) Don’t Come Across as Being Pushy
You need to be diplomatic when presenting your home to an appraiser or else, all of your efforts could be wasted. First off, you will have to meet with the appraiser assigned to you, and be as nice as possible, but be careful not to come across as overbearing. You can begin with sharing the information you have gathered on the value of the property and the highlights that you think would help increase its appraisal value. Once you have provided them with the selling points of your home, leave them alone to do their job undisturbed. After all, you wouldn’t want to come across as annoying to the person who is appraising your home. In other words, hovering around the appraiser is a big no-no.
2) Make Comparisons of Other Homes Nearby
By far, the best way to determine the value of your home is to compare it with other similar houses in your neighborhood. If you know the value of your home, you can challenge any attempts by the appraiser to lowball you during the appraisal. Rather than waiting for the last minute, do your own research. Make the trip to the local county offices to find out what similar properties are being sold for in your area, especially the ones that were sold during the past six months. If it was a distressed sale (fire sale) or maybe had some mold or underlying issues, making the appraiser aware (share your source/contact) of those issues should help ensure it's not used as a "comp."
3) Keep Track of Any Recent Improvements/Upgrades to Your Home
If you have spent money on the home that’s about to be appraised, keep a record. It’s best to save all the receipts and keep them safe in a file or you can digitize them and store them on a computer. You should also take before and after pictures of the property to show the difference to the appraiser. This can improve your chances of getting a better appraisal for your property. Keep in mind that not all improvements results in a dollar to dollar increase on your appraised value. Your $100,000 barn may only increase your appraisal $10,000. This can be frustrating and may help you sell it to a certain buyer that has your taste or needs for that but you can over improve certain aspects of your property. Also, if any major renovations or additions were done without proper permits or zoning can sometimes be discovered as the appraiser should pull the tax card to verify square footage/zoning etc.