They do research based on your property as to size, number of bedrooms, number of bathrooms, year built, lot size, and square footage. They gather data of recent sales in your neighborhood. The appraiser has to locate three similar sized homes which (here is the key) have sold in the neighborhood within one mile of your home within the past six months. The homes that meet the criteria are considered the comparable properties or "comps" for short. The appraiser then takes photos of your street, the front of your home, and rear of your home - as well as interior photos of the living area, kitchen, and main bathroom. He/She will walk through your home to draw a floor plan. The "comps" will have exterior photos only - which the appraiser photographs. The appraiser then chooses the "comps" that most reflect your home making adjustments of monetary value for any differences. He/She uses these figures to come up with the value of your home. So what have we learned? If you want to improve the perceived value of your home - improve your curb appeal. The appraiser takes photos of your street and front of your property to give the lender an idea as to the type of neighborhood in which the home is located. The front gives the lender an idea of its condition and its curb appeal. The back of the home and rear yard is taken because many homeowners don't take care of the rear portion of their homes and backyards. In most cases (over 90% of the time) what you see in the condition of the exterior of a home will be repeated almost exactly in the interior. So again - curb appeal. As they say "a picture is worth a thousand words".
oh, and they cab make or kill your deal if the value is not there. You are right curb appeal is the giant key
oh, and they cab make or kill your deal if the value is not there. You are right curb appeal is the giant key
yep curb appeal has a lot to do with it, but some of the lenders make them jump through hoops of late....with all the extra comps
All true points. It's important to price your home according to the comps. If you can't find comps to support your price, an appraised isn't going to either.
Appraisers often don't get inside the property to see how it REALLY looks. Curb appeal is SO important!
Dave you are absolutely correct. In today's market - the first place that tightening up occured was with the appraisals. The general public doesn't understand that having the best and biggest in the neighborhood isn't always a good thing. Prestigously, yes, but as far as value ... if there aren't any comps - the lenders cannot warrant the marketability should the mortgage default. I have seen underwriter's pick apart appraisal after appraisal. Lenders just aren't willing to take a chance on an over inflated value placed on a property. To somewhat alleviate appraisal problems, find a reputable appraiser that you trust that can do a little preliminary research to insure that their are comps available that meet the neighborhood requirements that support value. They can do this at their desks. Also, make sure your appraiser dots his/her i's and crosses his/her t's. If a simple matter is left undone...underwriter's tend to really search for anything to question at that point.
The exterior of a home is a great indication of what you will find inside. Neat, clean, well-maintained, etc.
Appraisers expectations have certainly changed in this market. Lenders expect much better comps.
I just had some buyers under contract on a home that wouldn't appraise for the negotiated sales price and the sellers wouldn't adjust the price to meet the appraised value. We found another home for the buyers and that overpriced house is now off the market. The sellers will be staying put for a while.
Bryan Flynn - I have found that most of the time when additional comps are requested, it is because somewhere on page 2 of the appraisal the comps don't follow the rules. 1. bracketing site size, square footage, room count. 2. line adjustments cannot be over 10%, Net 15%, and Gross 25%. 3. If the property is urban, the comps have to be within 1 mile, suburban 3 mi, rural 10 mi. 4. The recent sales date on all have to be within the last 6 months. 5. At least 2 comps have to have the same bedroom count. 6. Automatically flagged by the underwrtier when any time adjustments are made. ALSO at the top of page 2 it asks for the number and range of sold and pending sale properties within the neighborhood (a lot of appraisers leave this off). Still on page 2... look for (this is a biggie) an ammenity that has an adjustment across the board... e.i. subject has a basement and none of the comps do. Also, look at your map - and page 1 of the appraisal, draw a line around the neighborhood boundary description. Are your comps and subjects contained within the boundary? Are your comps all on one side of the subject? Does a main road or natural boundary break the subject from the comps? These are some of the things that underwriters look for to queu them to request an additional comp. Let your appraisers know, they appreciate knowing what is being scrutinized... preferably before you send the appraisal to be approved.
To Joe -- My local ReMax has some of the best agents. They - you guys - are so helpful in letting potential listings and FSBOs know what their neighbors sold their homes for... always giving them a good idea of where pricing should be.
To Susan -- My lenders are requiring full appraisals. 9 months ago they would take the 1004/70 appraisal form without interiors, when they started requiring them (I read the descriptions from the lenders and a 1004/70 is supposed to contain interior photos... have all along. I found it strange when I do get a 2055 form requested. I usually go ahead and get full appraisals on all of my transactions... costs the same... why not?
To Lorrie -- GOOD FOR YOU !!! Way to put integrity and compassion into the picture... not to mention protecting your client --- I'll bet you get many referrals through the pure act of pressing on.
To Linda -- You know... funny thing with Lenders... I was looking back through some old customer files from 1998 to 2003, just to check and see if a refinance may be a good possibility. Well, I pulled the actual files and honestly... I can definately see why the lender's cracked down on appraisals, I think they used to just ignore them - ALL EXCEPT the bottom of Page 2 "AS IS VALUE $*****.***"
Don't forget that an appraiser can comp your homes gross sq ft to the other homes living sq ft, looks good on paper, but when you go through the county town records you discover not only did he do this most of the homes where on larger lots and much much more update than he lead the bank to believe!!
Dear Angry Homeowner,
The lenders are scrutinizing everything about appraisals these days. They do catch the site sizes quite often. My biggest problem of late is: if a home is in a stable neighborhood of which the owners buy and stay ... there may not be any comparables. Comparables are recent sales - so how do I get the collateral appraisal to help my client that needs to refinance? Also, if my client needs to refinance their home and their neighborhood has declined, having foreclosures, short sales, and such and now their home isn't worth what they owe on it... it's a dilemna.
Melissa Cochran (Macon Mortgage, Inc)
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