Property Appraiser Considerations
In this article, we explain what a property appraiser looks at during the appraisal process. Most people should at least want to understand how an appraiser comes up with value. After all, an appraiser determines the property value, which could negatively affect your profit or even limit your ability to sell. Because of this, it is critical to understand many facts about the house’s construction and maintenance.
When selling an investment property or home, you will likely be required to hire a property appraiser. While Abbey Mortgage does not typically require an appraisal, most other lenders require will need one to close.
A real estate appraiser estimates the value of a single building or piece of land. Their job is similar to an assessor, with the difference being that accessors work for a municipality and look at valuing properties for public land use and tax reasons. An appraiser, on the other hand, is a licensed private company that specializes in either commercial or residential properties.
A property appraiser does research and then visits a property to observe its condition and characteristics. They to analyze the property compared to other properties in the area, known as comparables. Although you cannot influence the outcome of their assessment, it pays to understand how they look at and value a property.
Property Appraiser Facts
Appraiser Salary Range: Salaries range from $35,000-$80,000 per year. Salary depends on how many years of experience they have. Becoming an owner or a partner in an appraisal firm could increase earnings potential.
What Aspects of the Property Does the Appraisal Factor In?
- Local Market
The performance of the local housing market is very important. Valuation is heavily confirmed by using comparable properties that have either recently sold or are still active on the market. Appraisers use the information collected on similar properties in the area to calculate the final appraised value.
- Location, Location, Location
Exactly where the property sits with other homes and amenities in the neighborhood is another critical factor that appraisers will look at. For instance, a home that sits on a large pie-shaped lot that backs on to a ravine will be worth more than a house with a standard-sized lot that’s on the main road. The appraiser will also look at how close the home is located to schools, shops, hospitals, parks, public transit, and main roadways, to name a few.
- Size, Bedrooms, Bathrooms and Beyond
Bigger homes with more bedrooms and bathrooms will generally mean a property will be worth more. That is as long as the number of each perspective room makes sense for the neighborhood and market. The appraiser compares the property with those that have the same bedroom and bathroom count when making their value comparison. As an example, a home with two baths will appraise higher only one. The size of your house and the lot are critical because everyone likes a large home located on a big lot. Size refers to more than just the total area they take up. Larger rooms are what buyers generally want and are looking for new homes with expansive spaces. Because of this, there is much more demand for bigger homes. Therefore, overall square footage will definitely have a big impact on appraised value.
- Condition, Structure, Strength, and Improvements
Condition and construction will be evaluated to identify the exact types of materials used to build the home. A home built with modern material will appraise higher. Updated materials, such as outside areas, garages, storage, roof, trim, finishes, counters, cabinets, lighting fixtures, and windows can also affect the value, even boosting efficiency and utility of the home. Beyond construction and strength, recent upgrades to the home can affect the appraised value of the property. For example, a kitchen remodel can help increase the appraised value.
- Presentation and Curb Appeal
Curb appeal is considered heavily when valuing a home. This means how a property is presented and how it looks from the street. An aesthetically pleasing front yard and exterior appearance add to appraisal value, as do the view and other ambient considerations.
- Age and Design
However, a newer home doesn’t mean higher value versus an older home. On one hand, newer homes are less likely to have issues and are therefore seen as lower risk. On the other hand, many older homes are in desirable historic neighborhoods. Regardless of age, the value of the property will be higher if the home has been updated and is well cared for. In addition, classic styling tends to stand the test of time, while some trendy designs and features may go out of style which will negatively impact the appraised value.
- Appliances and Systems
Air Conditioning, Heating, appliances, gas lines, electrical and plumbing systems will all be evaluated in the appraised value. If any of these are old or in disrepair, they will negatively affect the value. Well cared for and recently updated appliances will increase the property value.
- Clean It Up!
This should be obvious but a home that is a disaster is probably going to get a lower appraisal value. Whatever you do, make sure to clean up before the appraiser shows up. No dirty dishes, laundry or trash laying about.
How Does a Property Appraiser Determine My Home’s Market Value?
After hearing all of this, you probably want to understand better how the professional calculates your home’s market value using these factors. First of all, understand that they use a method known as the comparable sales price approach to assessing the value of most residential properties.
The appraiser uses market data of homes with similar features that sold within a radius of your property in the last six months. Typically, the data is limited to 6 months by most professionals. Older data can be irrelevant in terms of comparison with current real estate conditions and values. It is even better if the data is from not more than three months.
The properties they will compare will have to be quite similar to yours. For example, if you have a ranch home, they will compare with other comparable ranches. Then, the property appraiser considers the features of other properties to come up with comparable prices. So if your home has one less bath and bedroom to a comparable home of similar size in your area, the professional is going to adjust your home’s value based on the fewer number of rooms. But there are even more types of adjustments that can be made based on factors like age, location, facilities, and condition.
Can I Dispute a Low Value by a Real Estate Property Appraiser?
It can occur that your home may not be appraised close to the buyer’s offer. When this happens, you can take specific steps to make the sale to a closing. When there is a low appraisal from the property appraiser, you should get a copy of the appraisal report. Check it carefully and use the information mentioned above to create the foundation for a dispute. Sometimes, it is a clerical error on the part of the professional that results in the property being appraised at a value lower than what it should be valued in the market.
The error can be related to your home’s square footage. Sometimes, the appraiser may not have given relevant value to the ideal location of your property. When it is not a clerical error, you should check which the expert assessed comparable homes. Is there any disparity in terms of comparison?
It can occur that the appraiser may not have as much knowledge of your area and chose the wrong comparable home, which recently became a reality a while back. During the process of loaning $900k for a large fix-and-flip in Denver. Colorado. The appraisal was off and needed to be disputed. I was certain that there would be adjustments in the appraisal due to the factual and judgment errors with regard to the location of the property.
If you are unable to get an adjustment, you should seek a second appraisal, which you will have to pay for. It is essential to know that many times the buyers are not ready for a second appraisal. This is because they consider the property appraiser to be the professional whose verdict should be final. Besides, they have no reason to overpay for a home. This is important to realize, and you should also know that there are both good and bad appraisers, as in any other field of work. If the buyer doesn’t agree for a second appraisal, and if you want to go through with the sale, you will have to lower your property’s price to that of the appraisal.
How Can You Prevent a Low Appraisal?
When you are selling your home, you don’t want to have a low appraisal. The appraiser will not listen to what your opinion about your property is nor will they pay attention to your need to get a higher price for your home. However, you can take the following steps to increase your chances of getting a better appraisal. You can consider the following steps, beginning with how your home is maintained and presented.
Mention Additions & Improvements
Even the best appraiser having the training and ability to spot minute things is capable of missing certain things. This is where real estate agents can come into the picture and simplify things for the appraiser. Create a list of the improvements you have completed. Also, mention all additions that you think can add value. This can make the professional’s job easier while ensuring that everything is accounted for in the appraisal.
If there are any significant additions to the mechanical or structural aspects, such as a new bathroom or kitchen, it will undoubtedly draw the attention of the appraiser. Other additions you can include can be upgrading the HVAC system, installing new siding, or replacing a roof. All these changes influence the home’s value.
Clean Your Home
You should clean and unclutter your home before the appraiser visits. Even if they are going to look at all the structural and functional elements carefully, they will also consider what looks good and what looks terrible about your property.
You can make things easier for them by ensuring that your home looks appealing and free from clutter and anything that may be an eyesore. Even if some professionals are rigorous and limited to the primary factors, you should not think that an appealing presentation is not going to impress them.
It was many years ago that I started in the field of real estate business. I remember ignoring to tell a house seller how important it was to keep their property clean and clear. When I visited with the appraiser, the house was a mess. Clothes were scattered around, the sink was full of dishes, and the counter had food on it.
Since then, I have made it a point to let all my seller clients know about the importance of presentation and looks.
The fact is that there is a psychological factor involved when anyone visits a house. Depending on the presentation, you are going to feel good or bad about the house. When it comes to an appraiser, you must make them feel good about your home at all times.
Make sure that they don’t think of any mess when they return to their office and work on the appraisal report.
Enhance the Landscape
Spending a little bit of time enhancing your landscape can also help. There is no need to get any professional help. You can cut the grass, clean the yard, add more mulch to the flowerbeds, and trim the hedges yourself.
The thought may come to your mind that this may not seem to be as much important a factor as the square footage and the number and size of bathrooms and bedrooms. If those are the elements they will consider during the appraisal, why does appearance matter? The fact is that those things are undoubtedly crucial, but appraisers are still human.
Their mind is still going to take note of all the things. So doing a little bit to make your yard look better is undoubtedly going to make a difference.
Even the smallest of broken things will get the appraiser’s attention. You can repair or replace little stuff, and it is not going to cost much time or money. Examples include replacing a toilet flap or a missing fencer board. It is not going to require hours to do some minor repairs, and it is undoubtedly going to pay in terms of a higher value in the appraisal.
Help the Property Appraiser
You can also help the appraiser to make things better. When they ask any questions, answer them honestly. Help them to access all the areas quickly. Make sure that your real estate agent also attends the appraisal.
Your agent should be present to represent you. The Realtor can make things simpler for the appraiser by providing a list of comparable real estate. They can have the listing sheets and submit them to the appraiser.