Sellers: It will soon become necessary for you to keep VERY good records of the dates you do renovations in your home. When you go to sell, the appraiser will note this information in the appraisal report. You wouldn't want your closing delayed while you gather this information. Have it handy when the home is listed. Also, read below for the difference between remodel and update.
Pass this along to every Realtor you know. Re-blog this post, whatever you can do to get the word out!
As of September 1, 2011 appraisals will change drastically. We now must complete appraisals in what is defined as UAD or Uniform Appraisal Dataset format. This is a GSE Fannie, Freddie requirement.
What does this mean for you? The new reports will look foreign to you and your clients with all the codes we have to use in the reports, so you will have to be versed on what the codes mean. Instead of the old days where we described a property as being Good in condition or Good in Quality of Construction, we will now be using codes such as Q=3 and C-2, etc. It will be far less user friendly to read and more automated system friendly. Fannie and Freddie want consistency across the board for all appraisals nationwide and the codes are the way they are trying to get this accomplished. They have clearly defined what Fair, Poor, Average, Good, Very Good and Excellent Quality and Condition should entail. No more leeway in how appraisers determine this on their own. Lenders are also gearing up for uniform delivery of their loan packages and the UAD is part of this whole process.
If you GOOGLE UAD or Uniform Appraisal Dataset you should find a wealth of information on this topic. Be prepared and prepare your clients!
What do we as appraisers need from you? One of the big changes is we must know in what YEAR any renovations to the BATHS and KITCHENS were completed. In addition to the comments you already place in FMLS/MLS about renovations, we need the renovation year for the kitchens and baths. If the exact year is unknown then we need a specific range, ie: less than 1year ago, in the past 5 years, in the past 10 years or in the past 15 years.
If we cannot get this information in FMLS/MLS for the SUBJECT we must contact the owner if available or the Realtor and get this information and this takes time and mayt also delay closings! For all the comparable sales and listings that we use in our reports, we of course cannot contact the owner, so we will be contacting you the Realtor unless you have this information in your comments and photos. While we do NOT have to indicate year of renovations for the comparables, we really need this information in order to properly compare them to the SUBJECT. So any listing you have, please include as much detail about renovations as possible!
What else do we need from you? We need photos! Lots of them, more the better. Photos of the renovations and if you can add descriptions under your photos, please include the YEAR the renovations to kitchen and baths were completed or use the range noted above. Also needed is extent of renovation! Was it a REMODEL or just an UPDATE. For appraisal purposes a Remodel means a significant change, Gutting of the bath or kitchen, all new fixtures, flooring, cabinetry, appliances, etc. VS. Updating which brings it to current market appeal and standards without a total REDO! New Paint, Some new fixtures, refacing of cabinets, etc.
We must have this information included in every appraisal report. So if all Realtors add this information in the comments or under your photos, life will be easier for all as the appraisal will be completed SOONER and the deals will closed faster. Win/Win for everyone! Not to mention, the homeowner needs to get full credit for renovations and when they were performed!
** FOR THOSE OF YOU WHO PROVIDE GREAT DETAIL AND PHOTOS IN YOUR REPORTS, APPRAISER'S AND OF COURSE THE SELLERS THANK YOU!
I hope this POST is featured as we have to get all Realtors on board with this ASAP! So please pass this along to your Brokers too and let me know if you have any questions.
In Future Posts I will define in more detail the codes (which will look foreign to everyone for awhile) and what they mean and how they are defined in our reports