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Listing Agent Tips to Ace the Real Estate Appraisal Report

By
Mortgage and Lending with Blue Ridge Bank Mortgage NMLS # 78989

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:

  1. Appraise for at least the purchase price
  2. As-is condition (no repairs required)
  3. Access to all parts of the property
  4. No delays in the process
  5. 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:

  1. Utilities not working: hot water, power, permanent heat source
  2. Peeling paint on homes built before 1978 (may have lead paint)
  3. No access to portions of house (attic and crawl space are most common)
  4. Hot water heater not working
  5. Steps not permanently attached
  6. Extra dwellings on property
  7. Water stains. Sign of a possible leak
  8. Rotten wood
  9. Loose hand railings
  10. Missing or broken shingles, roof at end of life expectancy
  11. Missing built-in appliances (government loan requirements)
  12. Excessive moisture in crawl space
  13. Termite signs or damage
  14. Incomplete home improvements
  15. Non-permitted additions
  16. Can’t locate well and septic
  17. Tripping hazard
  18. Accessing the house or contact person to get in
  19. Loose wires
  20. 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

  1. Make all parts of the home accessible
  2. Ensure all utilities are on – water, heat, power
  3. Repair safety issues: missing outlet covers, exposed wiring, curled up flooring, loose handrails, etc.
  4. Paperwork available for warranties: appliances, siding, roof, HVAC. (This also proves age.)
  5. Use the checklist above to appraisal-proof the home

Realtors, Prepare for FHA Flip Rules

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:

  1. Seller to complete repairs
  2. Buyer and seller negotiate a solution
  3. Seller or buyer back out of contract
  4. Buyer pays for repairs
  5. 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 Veteransfirst 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?

Renovation Loans For Veterans Fannie Mae Homestyle RenovationCompare Renovation Loan Options

Link to original article written by Russell Smith

Posted by

Russell Smith - Your Mortgage Lending Expert

NMLS # 78989

Comments (2)

William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Great list and very sim alar to the one I give my sellers before the appraisal is needed.

Aug 30, 2018 03:55 AM
Russell Smith

that is great that you are proactive in this area! so important

Aug 30, 2018 04:57 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Russell, great list for homeowners to be ready for the appraisal.    You don't want them to have to return to the home for any reason.

Aug 30, 2018 04:48 AM
Russell Smith

Exactly!

Aug 30, 2018 04:57 AM