Often considered the silent giant in real estate transactions, appraisers can substantiate a purchase contract price or report that it doesn't appraise out. Death to a transaction is the later and that is why appraisers are termed the quiet giant. Their ability to assign value can create or make them quiet or kill the sale of a home which makes them the giant. Appraisers and their role in home purchases and sales are often misunderstood. Mark Nash author of four real estate books including 1001 Tips for Buying and Selling a Home and a regular columnist for RealtyTimes.com offers an inside perspective on residential real estate appraisers. -An appraisal is an unbiased estimate of what a buyer might expect to pay for a parcel of real estate, where both the buyer and seller are informed parties. To become informed mortgage lenders and buyers and sellers turn to licensed, certified appraisers to furnish an accurate estimate of value for a property. -The property inspection is the first step of preparing a appraisal report. The appraiser visually inspects the features, number of bedrooms, bathrooms, location, condition, remaining useful life and other factors that could effect opinion of value. During the inspection rooms are measured, diagrams are drawn and photos are taken of the property. Inspections last from fifteen minutes to one hour. -After the inspection the appraiser uses one of three approaches to establishing value. In non-rental properties the options are either the cost approach or the sales comparison. Rental properties utilize the income approach. -The cost approach uses information available that includes local building costs, labor rates and other factors to determine how much it would cost to build a like-kind or comparable property. -The sales comparison approach relies on the recent sales in the vicinity and finds properties which are comparable or similar in age, style, condition and location. The home being appraised is the subject property. The comparable's are as a basis depending if they have added or less features. If the subject property has a fireplace and a comparable's doesn't then the subject property has an additional value than the comparable. Likewise, if the subject property does not;t have a powder room, than the subject properties value is decreased versus the comparable that does. -The appraised value is often used as a guideline for lenders who don't want to loan a buyer more money than the property is actually worth. Do's and Don'ts when working with a real estate appraiser. Do -Have a clear copy of the contract when meeting an appraiser for a inspection. -Provide copies of all disclosures. These can verify that there are no material defects as reported by the sellers. -Furnish a copy of the plat of survey. This clearly states the exact measurements of the lot and a legal description. Easements and encroachments can also be identified from plats. -Make available recent sold comparable's (in the last six months) at the inspection by the appraiser. -List all upgrades and improvements that might not be visible to the appraiser. New roofs, plumbing, electrical, structural, and sewer improvements fall into this category. Don't -Sell the house to the appraiser. -Let the appraiser take in the property on their own terms. Don't hover. -Back up all information with written documents. |
