HOW TO PREPARE FOR AN APPRAISAL
For homeowners, a real estate appraisal is a critical step when buying or selling their home. The appraisal report for obtaining a mortgage allows the property transactions to occur among the buyer, seller, real estate agent and informs te mortgage lender of the market value of the property, so they can make a determination of the loan amount.
In order for an appraiser to be able to prepare an appraisal report and provide market value of the property they should be state licensed or certified to perform appraisals prepared for federally related transactions. Also by law, you are entitled to receive a copy of the completed appraisal report from your lender only, an appraiser cannot provide you with either the value or a copy of the report. If you disagree with the appraised value, you need to contact the lender (presuming you are obtaining a loan to purchase a home) and request a reconsideration of value, just make sure you have solid reasoning for it and supporting facts (i.e. additional comparables which you think can be considered, etc.)
To facilitate the appraisal process and make it most efficient, it is beneficial to have the following information provided to the appraiser prior to inspection:
- A plot plan or survey of the house and land (if readily available)
- Written property agreements, such as a maintenance agreement for a shared driveway
- If the property is owner or tenant occupied or if vacant
- If the appraisal is for refinancing of a loan or equity line of credit and there is recent MLS listing, share number of bedrooms and baths, occupancy status, internal and external improvements, new addition information, etc.
- Title policy that describes encroachments or easements
- Information about utilities – public or private, is there a gas at the property, well, septic, etc.
- Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells
- Sheet that lists major home improvements and upgrades, the year of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available)
- A copy of the current listing agreement and broker’s data sheet and Purchase Agreement if a sale is “pending”.
- Information on “Homeowners Associations” or condominium covenants and fees.
- A list of “Proposed” improvements if the property is to be appraised “As Complete” and given value as after the improvements are completed.
- Beneficial features like location in gated community, mountain/golf/waterfront views, etc.
Once your appraiser has arrived, you do not need to accompany him or her along on the entire site inspection, be best though to answer all questions promptly prior to the inspection, so that the appraiser can get an understanding of the property and select the best comparable homes to use for deriving the market value.
Here are some other suggestions:
- Accessibility: Make sure that all areas of the home are accessible, especially to the attic and crawl space
- Housekeeping: Appraisers see hundreds of homes a year and will look past most clutter, but they’re human beings too! A good impression can translate into a higher home value
- Maintenance: Repair minor things like leaky faucets, missing door handles and trim
- FHA/VA Inspection Items: If you are planning to use FHA/VA loan, be sure to ask your appraiser if there are specific things that should be done before they come. Some items they may recommend might be: Install smoke detectors on all levels (especially near bedrooms) and ensure that they are operational; install handrails on all stairways; remove peeling paint and repaint the effected area; provide inspection access to the attic and crawl spaces.
- If you have a manufactured home, it will be of great help if you can point the location of the HUD certificate and paper certificate that is usually located under the kitchen sink or in a closet inside the house. There is a metal plate with a number for each section of the manufactured home, if it has been painted over, make sure they are cleaned and clearly visible.
