Posted on: 07th Jun, 2007 10:39 am
Many home owners that have an appraisal done on their house have questions for the appraiser. Here are the top 5 questions home owners usually call my office to ask about.
Top 5 most asked appraisal questions by home owners
Remember, every local market is different! You should speak with a professional in your local market for answers specific to your regional area.
Top 5 most asked appraisal questions by home owners
- Q: Can I get a copy of the appraisal?
A: Yes! The lender should provide you a copy of the appraisal report. Whoever is named on the appraisal as the "Client" is the only person the appraiser is allowed to share or discuss the appraisal with, regardless of who pays for the appraisal. The lender is required by law to provide the homeowner with a copy of the appraisal.
Q. My neighbor has their home for sale for $XXX,XXX, why didn't you consider that?
A. There is a difference between active/pending listings and actual closed sales. Anyone can list a property for sale at whatever price they would like for it but that doesn't mean a typical buyer would pay that price. The appraiser's primary goal is to determine what a typical buyer under normal market conditions would pay for a property. If there is one sale in the neighborhood that sold for 50k over all other sales in the area and there are no noticeable differences, that home is outside of the typical price buyers in the neighborhood would pay and will likely not be used. If all the homes listed for sale are 30k over what all sold sales in the area show, the appraiser does not have evidence a buyer is willing to pay that higher price. The appraiser should use provable facts (closed sales) and not speculate on the market. This rule is broken when values are on a decline. If all closed sales are around 200k, but active listings are 150k the appraiser will consider these active listings heavily because of the substitution factor. Would use buy a new car for 50k when there are 20 other nearly identical cars in the same lot for 35k?
Q. The appraisal only took 20 minutes, why am I charged so much?
A. This is a question appraisers get asked a lot when at the property. The truth is appraisal fees have barely gone up over the past 10 years, far under inflation, the amount of work required by the appraiser has gone up with more liability and competition. The inspection process is a small percentage of the whole appraisal scope of work. I won't go into details, but the remainder of the work includes a lot of data collection, analysis, comparable selection, adjustments, drive time and of course writing the report on the appraiser's findings.
Q. Will my enclosed patio/converted carport/addition be included in the livable SqFt?
A. The appraiser will look for two things. What a permit taken (recorded with the assessor) and does it meet minimal requirements? You should check with the assessor if you do not know the answer. Min. requirements usually include the following; has heating/cooling, is level with the main livable SqFt, has flooring and has electrical and is connected to the main house with access from inside the home.
Q. What improvements will increase the value of my house?
A. This is a tricky question that depends on the neighborhood. Most typically bathroom and kitchen improvements draw the best return on investment but they are both the most expensive to do. Smaller improvements that can help raise the value are paint & lighting fixtures. Be very careful not over improve the property. If 95% of the homes in the area have laminate flooring, installing marble flooring will be an over improvement for the neighborhood and the ROI will go down.
Remember, every local market is different! You should speak with a professional in your local market for answers specific to your regional area.
That is really good information about appraisals. It will be quite useful for people looking for information on appraisals.
Miller
Miller
Truly speaking I learned a lot from this post. It is important for everyone looking to get an appraisal done. Share some more details if possible. I think it would be valuable for all of us.
Thanks
Blue
Thanks
Blue
I heard about certified appraisal & broker's market analysis/price opinion, is there some difference between the two?
I'm not sure what the brokers market analysis is, unless they mean the broker as in agent. A certified appraiser is another level of licensing the appraiser gets. It requires the appraiser to take additional eduction classes, submit example files to the board of appraisal and pass another exam. Once an appraiser is certified they have the ability to appraise property over 1 million dollars. It depends on the area the appraiser is licensed if it makes sense for them to get certied.
"Mike, I heard about certified appraisal & broker's market analysis/price opinion, is there some difference between the two?"
In addition to details Mike gave, other point about difference between the two is that a broker's price opinion is a kind of informal estimate of present market value of your house. And it is based on comparable sales data from your neighborhood. This data is available with the broker or real estate agent from the recent sales to which he has been part of.
In comparison, certified appraisal is formal estimate as of a specific date which is supported by analysis of relevant information. And certified appraisal can only be done by a state certified appraiser.
Miller
In addition to details Mike gave, other point about difference between the two is that a broker's price opinion is a kind of informal estimate of present market value of your house. And it is based on comparable sales data from your neighborhood. This data is available with the broker or real estate agent from the recent sales to which he has been part of.
In comparison, certified appraisal is formal estimate as of a specific date which is supported by analysis of relevant information. And certified appraisal can only be done by a state certified appraiser.
Miller
Hi Mike,
I have a few more questions which I would probably ask my appraiser when I buy a home.
Caron.
I have a few more questions which I would probably ask my appraiser when I buy a home.
- What does an appraiser look into at the time of appraisal?
- Should I have to pay more tax if my appraised home value exceeds the tax value?
- How do I know if my home appraisal is correct?
- Can I do anything to speed up the appraiser's work?
Caron.
Hi Caron,
All good questions.
Q. What does an appraiser look into at the time of appraisal?
When at the home the appraiser will be gathering several notes about the property.
Some examples are; roof type, build type (red brick, frame, etc), flooring type, bedroom count, bathroom count, landscape, site influences, location, # of covered parking, updating, deferred maintenance, A/C, Heating, elevation, unique features, style of home, energy efficiency items, fireplace, pool and will rate the condition of most of those items as either Poor/Fair/Average/Good or New. Some appraisers use different terminology as to their rating system. Many people get appraisers and home inspectors confused. The appraiser in not qualified to give you detailed condition report on a property. If the appraiser see's anything in question he/she will recommend that the property have a home inspection done. This will all be done in the typical walk through inspection. They will also get photos of the home and an sketch from the outside of the house (inside if condo).
Q. Should I have to pay more tax if my appraised home value exceeds the tax value?
Your tax's are determined by the assessors own appraisal. You will not be contacted by the assessor for this and most likely will never know they did their own appraisal to determine your properties value. The assessor does not have access to and will not base taxes off any appraisal you have done on your home.
Q. How do I know if my home appraisal is correct?
Assuming the appraisal was done by a reputable appraiser, it should assumed the appraisal is accurate. Remember when any appraisers does an appraisal on your home, regardless if it was for loan purposes the appraiser acknowledges that the appraisal can be relied upon by the home owner for any purpose. The appraiser is accountable for all work they do and if they value their career they will not jeopardize it with sloppy work. The appraisal industry is a practice much like doctors, lawyers and accountants and are required take updated classes to renew their license. If for any reason you feel the appraisal is off base, you should declare that to the mortgage lender or the appraiser with reason in writing. The appraiser will then offer a rebuttal and make changes if they see fit or explain why they did not. If you still do not feel satisfied, you should get a second opinion of value.
Q. Can I do anything to speed up the appraiser's work?
There are several things a home owner can do to help the appraiser.
1) Provide a list of all updating done to the home.
2) If you have a builder sketch of the property this can help assist the appraiser
3) If there are known issues with the house, announce them and explain
4) Keep your dogs locked in the laundry room or garage while the appraiser is in the other areas of the house :)
5) Do a general clean up! Appraisers don't, or I should say shouldn't consider the general cleanliness of your living style when doing the appraisal. That said, it is hard sometimes to see through the dust to realize it's a nice house in good condition, but just needs a maid service.
The appraiser will need to gather their own notes and cannot rely on what you say has been done, but this does help the appraiser in case they would have missed an item.
All good questions.
Q. What does an appraiser look into at the time of appraisal?
When at the home the appraiser will be gathering several notes about the property.
Some examples are; roof type, build type (red brick, frame, etc), flooring type, bedroom count, bathroom count, landscape, site influences, location, # of covered parking, updating, deferred maintenance, A/C, Heating, elevation, unique features, style of home, energy efficiency items, fireplace, pool and will rate the condition of most of those items as either Poor/Fair/Average/Good or New. Some appraisers use different terminology as to their rating system. Many people get appraisers and home inspectors confused. The appraiser in not qualified to give you detailed condition report on a property. If the appraiser see's anything in question he/she will recommend that the property have a home inspection done. This will all be done in the typical walk through inspection. They will also get photos of the home and an sketch from the outside of the house (inside if condo).
Q. Should I have to pay more tax if my appraised home value exceeds the tax value?
Your tax's are determined by the assessors own appraisal. You will not be contacted by the assessor for this and most likely will never know they did their own appraisal to determine your properties value. The assessor does not have access to and will not base taxes off any appraisal you have done on your home.
Q. How do I know if my home appraisal is correct?
Assuming the appraisal was done by a reputable appraiser, it should assumed the appraisal is accurate. Remember when any appraisers does an appraisal on your home, regardless if it was for loan purposes the appraiser acknowledges that the appraisal can be relied upon by the home owner for any purpose. The appraiser is accountable for all work they do and if they value their career they will not jeopardize it with sloppy work. The appraisal industry is a practice much like doctors, lawyers and accountants and are required take updated classes to renew their license. If for any reason you feel the appraisal is off base, you should declare that to the mortgage lender or the appraiser with reason in writing. The appraiser will then offer a rebuttal and make changes if they see fit or explain why they did not. If you still do not feel satisfied, you should get a second opinion of value.
Q. Can I do anything to speed up the appraiser's work?
There are several things a home owner can do to help the appraiser.
1) Provide a list of all updating done to the home.
2) If you have a builder sketch of the property this can help assist the appraiser
3) If there are known issues with the house, announce them and explain
4) Keep your dogs locked in the laundry room or garage while the appraiser is in the other areas of the house :)
5) Do a general clean up! Appraisers don't, or I should say shouldn't consider the general cleanliness of your living style when doing the appraisal. That said, it is hard sometimes to see through the dust to realize it's a nice house in good condition, but just needs a maid service.
The appraiser will need to gather their own notes and cannot rely on what you say has been done, but this does help the appraiser in case they would have missed an item.
"Many people get appraisers and home inspectors confused. The appraiser in not qualified to give you detailed condition report on a property. If the appraiser see's anything in question he/she will recommend that the property have a home inspection done."
Well I used to think appraisers & home inspectors do the same thing. LOL
Mike one question I need to ask you, if improvements are done on the house, does it result in increase in property taxes. You in your previous post said that improvements can result in increase in value of the house. So does these two relate in any way? Sorry if it looks like a dumb question.
Miller
Well I used to think appraisers & home inspectors do the same thing. LOL
Mike one question I need to ask you, if improvements are done on the house, does it result in increase in property taxes. You in your previous post said that improvements can result in increase in value of the house. So does these two relate in any way? Sorry if it looks like a dumb question.
Miller
Wow Mike, you've answered all my questions. How cool! :)
Hi Miller,
No they do not relate as far as I know... I'm not an expert on the way the assessor evaluates property but do know they don't have access to an appraisal done by a private party.
I guess they could easily access your mortgage info to see if you've borrowed on the property and how much, but I don't think they would use that to evaluate the full cash value.
No they do not relate as far as I know... I'm not an expert on the way the assessor evaluates property but do know they don't have access to an appraisal done by a private party.
I guess they could easily access your mortgage info to see if you've borrowed on the property and how much, but I don't think they would use that to evaluate the full cash value.
That's helpful to know, thanks Mike :)
Great info. I have a question.
If I get a property appraised by 2 different appraisers at the same time, would the 2 come up with the same value? How much % is within the tolerance limit?
Lets say if one appraiser comes up with the value of 500,000 can the second cite 550,000? You mentioned that a small % of the work is visiting the house and looking at it from the inside - most of the work is collecting and analyzing data as to how similar properties in the area compare and demand - and since the 2 appraisers would be looking at the exact same data, I would think they would come up with similar numbers, give or take a few hundred $. Is that true and to be expected?
If I get a property appraised by 2 different appraisers at the same time, would the 2 come up with the same value? How much % is within the tolerance limit?
Lets say if one appraiser comes up with the value of 500,000 can the second cite 550,000? You mentioned that a small % of the work is visiting the house and looking at it from the inside - most of the work is collecting and analyzing data as to how similar properties in the area compare and demand - and since the 2 appraisers would be looking at the exact same data, I would think they would come up with similar numbers, give or take a few hundred $. Is that true and to be expected?
Hi G.B,
Welcome to our forums.
What I find people saying that they've often had a low or a high appraisal. In that case, it is better to get it confirmed by a third appraiser. I know it costs a lot but then what do you do? What if you are taking out more money than your home's worth for. And what if you aren't getting a loan just because the appraisal is short and that too just because someone had it appraised inaccurately?
I have even come across people whose homes have been appraised for a value lower than its sale price and the difference is around $40,000! If it's a few hundred then it is justified – that's a slight percentage of error that can occur, but not the big difference of $40,000 or $50,000.
However, I think the difference is because there may have been due to different appraisal techniques being involved. For instance, a complete appraisal involving the interior part of the property can be different from that of a drive-by appraisal which does not include correct information about condition of the property or any improvement on the home.
Good luck
Welcome to our forums.
What I find people saying that they've often had a low or a high appraisal. In that case, it is better to get it confirmed by a third appraiser. I know it costs a lot but then what do you do? What if you are taking out more money than your home's worth for. And what if you aren't getting a loan just because the appraisal is short and that too just because someone had it appraised inaccurately?
I have even come across people whose homes have been appraised for a value lower than its sale price and the difference is around $40,000! If it's a few hundred then it is justified – that's a slight percentage of error that can occur, but not the big difference of $40,000 or $50,000.
However, I think the difference is because there may have been due to different appraisal techniques being involved. For instance, a complete appraisal involving the interior part of the property can be different from that of a drive-by appraisal which does not include correct information about condition of the property or any improvement on the home.
Good luck
"Great info. I have a question.
If I get a property appraised by 2 different appraisers at the same time, would the 2 come up with the same value? How much % is within the tolerance limit?
Lets say if one appraiser comes up with the value of 500,000 can the second cite 550,000? You mentioned that a small % of the work is visiting the house and looking at it from the inside - most of the work is collecting and analyzing data as to how similar properties in the area compare and demand - and since the 2 appraisers would be looking at the exact same data, I would think they would come up with similar numbers, give or take a few hundred $. Is that true and to be expected?"
Welcome to the forum G.B.
It would be very rare that two appraisals are dead on in terms of value and that should not be expected. The appraisal is a opinion of value and not a science. All appraisers follow the same methods of proving value, but opinions can vary greatly. In your case there is a 50k difference, or 10%. In my pratice, we strive to be within 5% of a typical sales price. If we can do that, then we are being very close to value. In this case both appraisals could be within 5 % of what it would sell for if it was able to sell for 525k.
I'd sugguest you ask for a rebuttal on either of the appraisals. Were the same comparables used on both the appraisals? If not, look at the closing dates, which appraisal ha homes that were the most recent?
Sorry there is no real easy answer. Yes the values can vary, but they really shouldn't vary by more than 5% IMO. If they do, then obviously one opinion is a bit off. In this market, I'd study the higher one and see if you can spot a reason why it appraised for so much higher?
Typically I'd assume the appraiser used older sales and didn't include any active listings, right? :)
If I get a property appraised by 2 different appraisers at the same time, would the 2 come up with the same value? How much % is within the tolerance limit?
Lets say if one appraiser comes up with the value of 500,000 can the second cite 550,000? You mentioned that a small % of the work is visiting the house and looking at it from the inside - most of the work is collecting and analyzing data as to how similar properties in the area compare and demand - and since the 2 appraisers would be looking at the exact same data, I would think they would come up with similar numbers, give or take a few hundred $. Is that true and to be expected?"
Welcome to the forum G.B.
It would be very rare that two appraisals are dead on in terms of value and that should not be expected. The appraisal is a opinion of value and not a science. All appraisers follow the same methods of proving value, but opinions can vary greatly. In your case there is a 50k difference, or 10%. In my pratice, we strive to be within 5% of a typical sales price. If we can do that, then we are being very close to value. In this case both appraisals could be within 5 % of what it would sell for if it was able to sell for 525k.
I'd sugguest you ask for a rebuttal on either of the appraisals. Were the same comparables used on both the appraisals? If not, look at the closing dates, which appraisal ha homes that were the most recent?
Sorry there is no real easy answer. Yes the values can vary, but they really shouldn't vary by more than 5% IMO. If they do, then obviously one opinion is a bit off. In this market, I'd study the higher one and see if you can spot a reason why it appraised for so much higher?
Typically I'd assume the appraiser used older sales and didn't include any active listings, right? :)
Great info Mike!
I would like to add another 2 cents.
Real estate, in economic terms, is an imperfect market. This means that there are several factors, including emotion, that will sway the inclinations of buyers and sellers in the marketplace. Since the primary approach to value in residential appraising is the sales comparison, it is easy to see why opinions may vary. It is part of the job of the appraiser to interpret the market and select sales that they believe are the best indicators of value. Obviously, a relatively homogenous neighborhood with a high level of sales activity, it should be easy for two opinions to be close. On the other hand, when the subject is unique or there are very few sales comparable to the subject, opinions can vary greatly.
If you have two appraisals that are way off from each other, both done at the same time, I would look at both very closely and decide for yourself which one has the most logical rational for their opinion. The problem I see quite often, is that most homeowners have an emotional attachment and want to believe that the higher appraisal is automatically the better appraisal. This may not be the case, and as Mike pointed out, in todays market you may want to be extra careful since a false assumption can easily lead you upside down in your mortgage.
Benjamin
I would like to add another 2 cents.
Real estate, in economic terms, is an imperfect market. This means that there are several factors, including emotion, that will sway the inclinations of buyers and sellers in the marketplace. Since the primary approach to value in residential appraising is the sales comparison, it is easy to see why opinions may vary. It is part of the job of the appraiser to interpret the market and select sales that they believe are the best indicators of value. Obviously, a relatively homogenous neighborhood with a high level of sales activity, it should be easy for two opinions to be close. On the other hand, when the subject is unique or there are very few sales comparable to the subject, opinions can vary greatly.
If you have two appraisals that are way off from each other, both done at the same time, I would look at both very closely and decide for yourself which one has the most logical rational for their opinion. The problem I see quite often, is that most homeowners have an emotional attachment and want to believe that the higher appraisal is automatically the better appraisal. This may not be the case, and as Mike pointed out, in todays market you may want to be extra careful since a false assumption can easily lead you upside down in your mortgage.
Benjamin
