What is an Appraisal?“An appraisal is an opinion of value.”Can you elaborate on that statement?How do you understand appraisals?
The Appraisal Process• The appraisal is ordered by the lender by contacting anAppraisal Management Company that contacts anappraiser or appraisal company.• The appraiser makes an appointment to view theproperty.• The appraiser views the property, researches theproperty, and analyzes market trends and data.• The appraiser prepares his/her report and forwards it tothe lender via the Appraisal Management Company.
10 Tips for Agents1. Don’t restrict the appraiser’s abilityto see the property.2. If an appraiser calls, be responsiveand provide as much information asneeded, even after the transactioncloses. (see Purchase Contract,11.5: “Buyer and Seller authorizethe Broker to report sales andfinancing concessions data to theMLS membership and MLS solddatabase as applicable and toprovide this information to statelicensed appraisers researchingcomparables, upon inquiry, to theextent necessary to adjust price toaccurately reflect market value.”How can you help the appraisal process? Here are some tips:
10 Tips, continued3. Be as descriptive in the MLS as possible aboutyour listing and include as many photos as yourMLS will allow.4. Don’t use or reference tax records as your sourceof information.5. Distinguish “above grade” living area from “belowgrade” living area in your MLS, particularly thequality of finish in “below grade” living area, decks,etc.
10 Tips, continued6. Provide an “Appraiser’s Package” in advance andhave it available at the property when theappraiser is inspecting the property, or meet theappraiser at the property so that you can answerany questions or inform the appraiser of uniquefeatures.7. Provide a fully executed copy of the purchasecontract with all addenda.
10 Tips, continued8. Explain to the seller or buyer that the role of theappraiser is not to confirm the sales price but toprovide the lender an independent, objective andimpartial opinion of the value of the property. (See TheAppraisal Foundation’s “A Guide to Understanding aResidential Appraisal”)9. Real estate salespeople and consumers can bepresent during the appraisal inspection. Make sure allparties allow the appraiser the space and time tocomplete their appraisal inspection, uninterrupted.
10 Tips, continued10. Make sure the propertycondition, (inside andoutside) is the best possiblefor the appraisal inspection,and inform the seller thatinterior and exterior photos(and measurements) mustbe taken by the appraiser.From: “Appraiser Insight Blog,”National Association of Realtors®
“Appraisers Package”What does an “Appraisers Package” consist of? Hereare some possibilities:• Plats• Surveys• Deeds and Covenants• HOA Documents• Floor Plans• Specifications
“Appraisers Package”More possibilities:• Inspection Reports• Neighborhood Details• Recent Similar-quality Comparables• Detailed List and Dates of Upgrades and Remodels• Energy-efficient Green FeaturesWhat are some pros and cons of these items? Arethere any items you would definitely not give anappraiser?
Keep in Mind• It is always a good idea to offer the comparablesused to price the subject property to the appraiser,keeping in mind that a “comparable” is defined as aproperty, should the subject become unavailable,that would be a suitable substitute. (See more here)• The more information an appraiser has, the moreaccurate the report.
Keep in mind• Appraisers must “prove” their opinions, based onmarket data.• Appraisers don’t set out to “kill the sale” but mustadhere to lender and investor guidelines and thesubject property’s neighborhood.• Agents should not hesitate to contact an appraiser fortheir guidance on matters pertaining to appraisal typequestions; however, agents cannot tell an appraiserwhat the appraisal report for a particular propertyshould, in the agent’s opinion, say regarding value.