Appraisals and You: Why you need to be proactive

Good Evening Folks,

I thought I'd share a bit of advice with you, my dear readers which I've learned the hard way recently. My pearls of wisdom (ie; nuggets of "hard cheese") are regarding the landscape we in the Housing Industry are currently attempting to navigate regarding appraisals.

It's been a very difficult couple of years for home values as I'm sure many of you can attest to. Whether you're purchasing a home, selling one or trying to refinance one, values tanked when the foreclosure crisis first hit. They somewhat rebounded when the Homebuyer Tax Credits (remember there were two rounds of them) created a flurry of activity in the marketplace. And now they've begun another maddening decline since April (when the tax credits expired). This post isn't to discuss why values are tanking again. That is a subject which would probably require a PhD dissertation and I'm not in the mood for grad school tonight.

What follows are some tips which Listing Realtors, Selling Realtors, Sellers and Homebuyers should keep in mind if you're at all concerned with the value of a property when mortgages are involved. Yes; I basically just called out each and every party to a typical real estate transaction. You think your jobs end when the sales agreements are signed? Think again! (or risk never reaching the closing table)

1) Provide the CMA to the Appraiser when he shows up for informational purposes. Now more than ever when Appraisers are forced to look to foreclosures, short sales and just plain old stale sales (comparable properties which sold more than 6 months ago) it will only help your case to provide the logic for how you priced the house.

2) In the event that the house sells considerably under / over "Asking Price" provide comps which you believe will support the sale price. Don't assume the Appraiser will find them on their own. Make their life easier and you shall be rewarded! (hopefully...no seriously...cross your fingers)

3) If there has been work done which you believe added value to the property provide a detailed and easy-to-read list of the work performed. Show the house off when the Appraiser shows up! Remember though that not all home improvements add value "dollar for dollar". The ones that will add the most will have increased the "functional utility" of the house.

4) Clean!!! This is a no brainer. If you just don't have the time to get the house in top shape because you're too busy with other things; well maybe you're too busy to obtain financing on that property as well. Realtors can attest to the absolute necessity of curb appeal to attract buyers. In my opinion the same can be said of Appraisers. You say they should be able to see through your mess; it's their job. I say; they're human, just like you and me. If they walk into two identical houses and one is immaculately maintained and one looks like you just had a birthday party for an 8-year old, I would put my money on the former to appraise for a higher value. Appraisers are subjective. (Highlight that.)

5) Greet the Appraiser courteously, promptly and make sure they can get in and out of every room in the house with ease. Don't let the dog bark at them or bother them in any way. Your chocolate lab might be a total sweetheart and only barking because she's happy to see someone but the Appraiser doesn't want to deal with it one way or the other. Trust me. An Appraiser wants to get in and out quickly. They are not well paid for what they do these days. They want to spend as little time as possible looking at, researching or writing about your house. Make sure their first impression couldn't be more pleasant and getting them in / out quickly goes a long way.

6) And this is the final tip which sums up the need to pay attention to the first five. Don't rely on your mortgage professional to do any of the above. The Home Valuation Code of Conduct which was widely adopted for all Fannie Mae / Freddie Mac / FHA & VA loans this year won't allow us to have ANY contact with Appraisers. If you believe a house should appraise for a certain value and are relying upon mortgage financing it's your job to make sure the Appraiser believes in it as much as you.

The caveat here is that you can't "influence" an Appraiser's opinion of value. My tips above if presented for "informational" and helpful purposes only, should at least show an Appraiser that you've thought about the true value of the house and not pulled a pie-in-the-sky number out of the air.

Finally, all the above being said; sometimes a house just isn't going to appraise where you think it should. These are trying times we find ourselves in and we all have to hunker down and plod ahead.

Buenos Noches!

vLogging

Good Afternoon Everyone,

It's been quite awhile since I last posted to this blog but coming into the end of the year I've decided to start spouting my opinions once again.

There's been a ton of changes in the mortgage and real estate industries in the last year so I thought it might be a cool idea to create a YouTube channel. Starting tomorrow 12/22/10 I'll be posting a video blog or vlog as the internet has dubbed it daily.

It'll include my observations on interest rates, housing sector issues, economics and probably a bit of advice about mortgage programs. I'm new to posting video on the net so I'm going to take baby steps, starting with just a good ole fashion webcam.

That's it for today. Click on the title of this post to check out my channel tomorrow afternoon. Hint: www.youtube.com/andrewshartenberg

- Andrew