What is Appraisal?
Tips to Prepare for the Appraiser’s Visit
A home appraisal is an opinion of fair market value of a property as of an effective date, usually the day of the appraiser’s visit. Typically, appraisals are completed for home loans as a requirement for financing, but they are also completed for other purposes such as estate planning, tax appeals or insurance purposes. It's important to note that a home appraisal is not the same as a home inspection. While a home inspection is focused on identifying defects with the property, a home appraisal is focused on estimating the property's value. However, the appraiser has had some training in construction and home systems, if potential defects are observable the appraiser will make note of them, if any defects present a potential risk to the health and safety of the occupants, the appraiser will likely require these repairs or defects be corrected as a condition of the appraisal. It’s wise to thoroughly inspect your home and make any minor repairs, cleaning and removing clutter will also show the home in the best light. Some owners hire a home inspector or professional cleaning crews before they list or have a home appraised, while going to this extreme may help it is certainly not required, a clean well-cared for home will adequately show its value.
During a home appraisal the appraiser will measure and take photographs of the exterior and interior of the home. All lenders require photographs, at a minimum the front, rear and street views, and the kitchen, all baths and main living areas of the interior. The appraiser must have access to every room, basement, attic and garage.
The appraiser will then use this information to estimate the value for the property by comparing the home to similar sales in the market area or neighborhood. The property's location, lot, bed and bath count, size, condition and features are generally the most relevant elements for an appraiser to consider. Recent improvements as well as any negative factors that could affect value are all considered. A recent kitchen or bath renovation or new windows, roof or plumbing modernization generally have a significant impact on value.
Tips for preparing for the appraiser’s visit:
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Make sure the property is tidy and repair any obvious damage or defects.
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Gather documentation: if you have a land survey, please make a copy for the appraiser. If you’ve done some recent improvements, a brief description of the project scope plus costs can be very helpful, make sure you have access to any relevant documents, such as receipts, contracts, or permits, on hand, if a project is in progress these documents are essential.
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It’s not necessary to give the appraiser a tour or follow them around during the visit, but a brief conversation with the appraiser is welcomed. Highlight any unique features or amenities, a custom media room or wine cellar, a well finished basement, a recently remodeled kitchen or new windows, any energy saving features or recent modernizations can also have significant impacts on value.
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The appraiser will likely ask about any negative factors that could affect the value of your property, such as a busy road or a power line nearby, are these externalities a concern, were they when you bought the home?
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If you have pets please secure them, for dog owners please inspect the back yard carefully, a wrong step can be very distracting and make the ride home very unpleasant.
The appraiser will then go back to the office, research the market, search for suitable comparable sales and write up the report. If a lender is involved the appraiser can only deliver the report to the lender, this is our client. The lender in turn must send a copy to the homeowner. Any questions or concerns after the report has been delivered must also go through the lender. If the owner engages the appraiser directly, the owner is the client and can freely speak with the appraiser about the report. From inspection to delivery, the appraisal process usually takes between 5-10 days. If a lender is not involved the turn time is generally shorter.
The visit usually takes an hour or less, and are generally conducted in the morning. I generally don’t appraise more than one home per day, most owners prefer scheduling earlier in the morning so they can get to work at a reasonable hour or on time. The home owner generally picks the day and time of the visit, and with some minor flexibility I am on time, your time is valuable.