AppraisalNEWSCAST.com

Over the 40 years my family has been in the appraisal business to say we have seen a lot of changes would be an understatement. In the 70’s and early 80’s appraisals were just a one page piece of paper with the appraisers signature and company letter head.  In the 80’s and 90’s they introduced the forms, then photos and licensing. Currently it seems as though you have to swear your children on the appraisal and go through an extensive background check before they will accept a single appraisal. The changes which have occurred over the years are generally a good thing, and even through all of the changes appraisals have fundamentally remained the same. The appraiser looks at the subject finds the most recent comparable sales and concludes with a value.

The changes that have taken place this year and that are taking place right now in the appraisal world have not only changed appraisal reporting but have reinvented the industry.  I remember the days when your local appraiser would know all the lenders, banks and brokers in their service area on a first name basis. Only up until a few months ago an appraiser could spend time with the loan officer’s; it was essentially your friends sending you business. Now, mainly due to the HVCC regulations times have seriously changed for appraisers. Not to say the HVCC is good or bad but if you want to stay in business, you must adjust with it.

Here are some tips that might help you as the times change so your business may continue to thrive:

1. Work with appraisal management companies – AMC’s are here to stay and will be a part of the appraisal industry long-term. They provide a valuable service to the client and ensure compliance with all regulations. Keeping appraisals in house is extremely costly for a lender and current regulators frown upon having “in house” appraisal management companies.
2. Keep your information up to date for all of your clients – If you renewed your license, expanded your coverage area, changed your fees or got an additional certification this is something that your clients will really want to know. Keeping this information up to date will ensure the possibility of receiving work as well as prevent the possibility of automatic removal from some panels (like FHA connection). A good way to keep track of this is by having a simple spread sheet of people you are signed up to do business with an keeping your login information ready . Once you change or update something you can spend a few hours updating all of your information and you are good to go.
3. When you do get an order communicate every step of the way – Most clients will want a daily update on all outstanding appraisal files you have with them. Everyone is in the service business and when you fail to keep the appraisal management company abreast of any changes regarding your files, it reflects negatively on you as well as the AMC. When the client calls and asks’s for an update saying “we can’t get in contact with the appraiser” is not a status and it looks extremely unprofessional. If the problem is consistent good AMC’s will stop doing business with you as communication is a must.
4. Turnaround time- It’s not like it used to be when the loan officer called and told you they needed the appraisal in a week and you could take your time. Right now the lender and the loan officer don’t know who you are, don’t have any idea what the value of the appraisal will be and the last think they want to do is wait a long time for an appraisal. Most lenders and appraisal management companies track the average turnaround times for their vendors and the details as to why a particular file took a long time is not always clearly communicated. They also look at total turnaround and not time from inspection. This is important to remember if deciding to accept work. If you know you can’t see a property for another week or two it might be better to just turn down the file rather than mess up your turnaround. For revision 24 – 36 hours is the maximum time it should take unless clearly communicated as to why this is not possible. To be on the safe side always under promise and over deliver. Most lenders and AMC’s will accept a 4-5 day total turnaround on appraisal anything more  your are putting yourself at risk at being beat out by another appraiser. This does vary from state –to state and county-to-county.
5. Make your appraisals “crystal clear” – In the past, the underwriter knew who you where and you knew exactly what they expected from you. Currently your client based as just tripled as the one or two banks you were doing work for has gone up to 30 or 40 as most AMC’s work with more than one lender. Due to this making sure your appraisals are clearly presented and professional the first time is extremely important. Very often when we call an appraiser for a clarification on a report they go into this very professional  logical rationale on why they did what they did, our next logical questions is always “where does it say that in the report?”. Most appraisers know what they are doing the only thing is they do a poor job communicating this on the report. The vast majority of revisions as well as quality control problems could be avoided if the appraiser would just explain why they did what they did.

This is not a complete list however is a good stepping stone for you to be on track to getting the most out of the current appraisal regulations and changes. The most important thing to remember as an appraiser is that you have finally gained your independence and can focus on appraising and not all of the other things like in the past. Now is the time where the best appraisers will really do the best and not the ones just “hit the numbers”.

With market conditions as they currently are, appraisal values are the controversy of the industry, and the forefront of the concerns for most borrowers and mortgage lenders. The person getting all of the blame and that shouldn’t get any of it is the appraiser, just like you don’t blame the weather man because its raining you don’t blame the appraiser because values have dropped. The reality of the situation is home values are down. In most areas and the majority of borrowers owe close to or more than their home is worth. This = Reality,  Due to this one of the most important things is getting  an appraisal is getting the highest appraised value possible.

What I am going to give you are some tips from first hand knowledge and experience with my personal experience appraising over 10k homes myself and my company Coester Appraisal Group appraising over 200k homes over the past few years. Some are obvious and  some are not so obvious, but none the less this it will be your best bet in getting the highest legitimate appraised value. These tips are not to fraud the appraiser or to trick the appraiser into appraising your home higher . These tips are for you to put your best foot forward and get the most from your home appraisal.

So what is an appraiser looking for during the inspection?

When an appraiser comes to your house there are some basic motives for their visit. They want to get the tour, get an idea of the quality of the home, the renovations,  the positives and negatives  and the overall feel of the property. They will take pictures, measure, walk around, look around and ask a lot of questions. Just a soon as they arrived they will have left and you will be left wondering if your home appraised what you thought it was worth or even close to it. The inspection is just a quick part of a much longer more in-depth analysis that takes place at the appraiser’s office. The inspection of a home is the fun part. The work begins as the appraiser looks through 100’s of pages of data trying to match up and compare your home with homes in your area and then draw a conclusion from this process.

So what can you do?

The biggest thing is already done for you and this is your location, your neighborhood, and the overall quality of the home. There is little you can do to change your neighborhood and the layout of your home over the weekend so I would just leave this alone.

When an appraiser inspects a home they are trying to figure out what classification of quality the homes falls into within the specific market area. The market area is just simply the area in which a buyer would look if they were looking to buy your home and your wasn’t for sale. Each market area has neighborhood’s and each has its own unique set of home standards and buyer expectations. Within each neighborhood you have homes on the low-end that are typically not in very good shape and sell cheaply. You have really nice well-kept and renovated homes that sell for much more and you have your middle grade home sell for about what the average home sells for in the area. Of course not every home falls into an exact category and there is a gray area but, what an appraiser will do is naturally categorize your home when it compares it to other homes in your neighborhood.

They will ask themselves is your home on the higher end, the lower end or middle grade and choose comparables accordingly. Because of this it is extremely important to prepare for your home inspection as this is the one shot you have at putting your best foot forward for the value of your home. Remember this is just an appraisal and a professional appraisers opinion of the value of your home is not the end all be all of the value. Studies have found appraisals to typically be within 5-7% of the homes real value and should be considered a gauge.

So what can you do to get the highest appraised value?

1. Make sure your house is nice and clean – it may sound like common sense but as saying goes common sense isn’t that common. An appraiser IS going to look at the overall quality of your home and get a feel for the market appeal. Just like if you were buying a car you would pay less for one that was dirty vs one that was clean even though they were identical by every other factor. The appraiser is going to look at things the same way. They will look at the cleanliness of your home, take photos of various rooms and factor this in on the comparable selection and adjustments. Now before you go hire a maid and run to Lowes for a steam cleaner remember the appraiser is just looking for general cleanliness and upkeep and not FREAKY clean. You don’t have to set your dining room table and you don’t have to polish your door handles. The homes should be respectably clean and tidy.

2. Fix all the little things you have been meaning to fix – Every house has a few things they have been meaning to fix for weeks, months or even years and with all good intentions you just haven’t got around to it yet. But like Tony Robbins says “when would now be a good time?” All of these little thinks that haven’t been fixed like the broken sink, missing handrail, hole in the drywall and the 100’s of other things that break easily in a home that don’t require immediate repair add up. These things could possibly prevent you from getting a loan and will negatively affect the value of your home. Be on the safe side, spend a weekend and get all those odds and ends fixed so when the appraiser comes you are read to go.

3. Don’t give our appraiser comps- Some people suggest contacting a Realtor or going to your tax office to pull local sales of what you think are similar homes. I am telling you being born in the appraisal business DO NOT DO THIS. For one your wasting your time as the appraiser is going to pull their own comparables regardless of what you give them. Secondly, chances are the comparables you pick wont be the best comaprables our even close to usable comparables and if the appraiser does look at them and take them seriously your just going to end of confusing them or offending them. I can’t count the times when a homeowner or Realtor has handed me totally unusable comaprables that are so overpriced and not similar to the subject being appraised you almost question your own beliefs as to what a sane person is. An appraiser doesn’t want help picking there comps, stay out of there way and let them do there job.

4. Have a copy of an old appraisal readily available - This is a very valuable tool to hand to the appraiser. First thing it does is show what another professional appraiser valued the home for previously . Secondly, it provides a basis for their appraisal and will help speed the process along . If the appraiser can look at what another appraiser did and see their logic there adjustment and how they approached solving the problem of estimating a market value you are on your way to getting a faster more accurate appraisal.

5. Make a detailed bullet list of the improvements – The list is a MUST!! The appraiser is only in your home for 30 – 45 minutes, and an hour a most. There is no way they could ever know as much about your property and its value adding features as you do. The problem is when the appraiser is there your so busy showing them around and being hospitable you forget to fully mention all of the recent updates, renovations and features that could impact the value of your home. The thing to remember is to be detailed , honest and fully disclosing. Everything means something and anything you recently did to improve your home is worth noting and worth writing down. You want to hand this to the appraiser when they first arrive so when they are walking around you can point the features out and show off all of the beautiful things about your home.

6. Have a survey ready – This is not as big of a deal if your in a townhouse, but if your on home is detached on acreage or on multiple lots a survey is an absolute must.County tax assessment offices don’t always keep the most accurate up to date records and sometimes the information about your land is not available. Having a recent survey to give to the appraiser this will greatly increase the chances of them doing a better, more accurate appraisal and will ensure that your land and site is properly accounted for. If your home backs to water or a park knowing how much of your land is on the waterfront or how much backs to parkland is a valuable tool in assessing the value of the lot as well as placing a  value on your location and ultimately your home.

7. Have information on any distressed sales or recent lower than normal sales in the area- Appraisers as you probably already know aren’t perfect and can sometimes get blinded by the trees and not see the forest. If you recently had a person on your street sell their house in foreclosure because the house was condemned and it was infested with termites ,this is something you should tell the appraiser. The reason is because all agents and all MLS systems don’t have detailed information on every property. If a home on your street sold for $50,000 and they can’t find any information on why it sold so low the appraiser might take that information at face value. If there are very limited sales and no reason not to use that home then they will use it and say they were no other better comparables which is totally legitimate. Because of this its a good idea to know a little bit of information on the recent distressed sales just so you can mention to them that they might want to do a little more investigation.

7.5 Let the appraiser do their job – Everyone’s home is never worth as much as they think it should be. Typically appraiser’s are right and they are doing the best they can with the information they have on your home and other similar homes in the area.