As the seller’s representative, it is important to educate your client on the real estate appraisal process. Knowledge of the appraisal process, plus preparing for it can make a big difference on a sale. As a seller and listing agent, the appraisal goals should be:
- Appraise for at least the purchase price
- As-is condition (no repairs required)
- Access to all parts of the property
- No delays in the process
- Keep the stress low
Most Common Real Estate Appraisal Issues
For a seller and their agent to have the best chance of a successful appraisal, it is key to understand the most common appraisal issues. Here are our top 20 real estate appraisal issues:
- Utilities not working: hot water, power, permanent heat source
- Peeling paint on homes built before 1978 (may have lead paint)
- No access to portions of house (attic and crawl space are most common)
- Hot water heater not working
- Steps not permanently attached
- Extra dwellings on property
- Water stains. Sign of a possible leak
- Rotten wood
- Loose hand railings
- Missing or broken shingles, roof at end of life expectancy
- Missing built-in appliances (government loan requirements)
- Excessive moisture in crawl space
- Termite signs or damage
- Incomplete home improvements
- Non-permitted additions
- Can’t locate well and septic
- Tripping hazard
- Accessing the house or contact person to get in
- Loose wires
- Time to complete the appraisal
Tips to Avoid Delays and Extra Costs On a Real Estate Appraisal
Notice #20 above. There is a growing epidemic of a lack of certified appraisers. There are not enough appraisers to handle the number of sales. There’s not much that sellers and Realtors can do about that, but they can help by preparing the property and providing full access to it. Use the above as a checklist as a guide prior to listing the home for sale. Then if there are issues, hire a qualified contractor to fix them.
5 basic tips to avoid unnecessary delays and costs
- Make all parts of the home accessible
- Ensure all utilities are on – water, heat, power
- Repair safety issues: missing outlet covers, exposed wiring, curled up flooring, loose handrails, etc.
- Paperwork available for warranties: appliances, siding, roof, HVAC. (This also proves age.)
- Use the checklist above to appraisal-proof the home
If there are issues mentioned earlier, the appraiser would probably require a re-inspection. Appraisers list the items as “subject to” which means the appraised value is subject to certain items being remedied. Although the re-inspection cost is the buyer’s responsibility, a seller wouldn’t want to cause the buyer an extra cost. Re-inspection costs range from $100 – $150. What’s worse is when an additional inspection fee is added. Why? Too often, lenders are told that the repairs are completed. So, the appraiser visits the property again for the final inspection only to find the work is not fully completed. Again, more delays and unnecessary costs!
Renovation Loans Solve Appraisal Issues
Let’s say the real estate appraisal report requires several repairs. That’s when choices need to be made. 5 most common choices include:
- Seller to complete repairs
- Buyer and seller negotiate a solution
- Seller or buyer back out of contract
- Buyer pays for repairs
- Buyer uses a renovation loan to finance repairs
Many forget about the renovation loan option. Renovation loans allow for repairs to be financed as well as be completed after closing. Luckily, OVM Financial renovation products finance repairs or improvements for Veterans, first time home buyers, investment properties, second homes, and more. Plus, don’t forget that renovation loans are not just for appraiser required repairs. These allow for borrower chosen remodels such as upgrading a bath or kitchen. Want to learn more about renovation loan options?
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