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What You Need To Know To Prepare For A Home Appraisal

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We had a great training session with John Chapman and Nathalie Palmer from Omni Appraisal Services about the current market and how to help get your properties to appraise for the contract sales price or at least get better results.

Here are a few key items to take into consideration when know who you are working with on your appraisal:

There are two types of appraisers – licensed and certified. Licensed Appraisers can only do values up to $1,000,000. Certified Appraisers can do any property value. Additionally, Certified Appraisers must take a test and have a Bachelor’s degree. Only Certified Appraisers can appraise FHA loans.

Did you know there are two types of appraisers?
– Licensed and Certified
Do you know the difference?

  • Larger banks are paying less to appraisers through Appraisal Management Companies.  Almost all of the banks own them so they can make more money.  This is not always a “good thing”.  Often times you will get an appraiser with less experience or one that will rush through the process because they have to make up their income by doing more volume.  Appraisal companies are in place to put a buffer between the lender, Realtor and appraiser to perpetuate a more “arm’s length” transaction.  What has resulted is that the banks are using this as a profit center and not always employing best in class appraisers.
  • Check with the appraiser’s competency and local knowledge.  Ask where they are located and if they are familiar with your property/area.  Additionally, ask how long have they been appraising homes?  Lastly, check and see if they work from home or office?   Many small owner operators work from home and as a result, don’t get exposures to other appraisers.  This lack of networking, idea sharing and updates on the market can hurt appraisals.
  • Education for appraisers is getting tougher.  There is an apprenticeship for 2 years now.
  • There are two types of appraisers – licensed and certified.  Licensed Appraisers can only do values up to $1,000,000.  Certified Appraisers can do any property value.  Additionally, Certified Appraisers must take a test and have a Bachelor’s degree.  Lastly, only Certified Appraisers can appraise FHA loans.

What you need to be prepared for your appraisal:

  • Always bring your own comparable sales – make sure they are good comps so you can build creditability.  Even bring low sales and let them know what the issues were that resulted in their low sale – pet odors, back to power lines, short sale, foreclosure, etc.
  • If at all possible, provide plat/floor plan – proper measuring is critical because if its 100 square feet off the true square footage you will have issues
  • Bulls eye approach – first look in subdivision, then do a radius search of 1 mile, 2 miles, etc. to find the right comparable properties.
  • Use a couple of higher sales, couple of smaller home, the radius approach to finding properties and a couple within the timeframe of settling within 3 months or less
  • You now need to have 5 to 6 comps
  • Provide 1-2 under contract comps as part of your presentation
  • Find FSBO too!  They can help your cause
  • Pass on any and all information you know about your property – list all recent improvements and their cost/value to help support your price.
  • Provide details on other offers if you had multiple offers
  • Provide additional pricing details like the Home Pricing Wizard, RBIntel statistics, and articles relating to escalating prices.

Steps to overcome low appraisal

  • Get a “good” conversation going, kill them with kindness
  • Provide new info that the appraiser might not be aware of when you met initially at the property
  • Be there when the appraiser wants to meet at the property
  • Use their language
    • Beneficial
    • Neutral
    • Adverse

Appraisers need to be concerned with the following items:

  • Safety –  the house needs to be safe, easy to explain
  • Soundness – the house needs to have structural integrity including but not limited to the roof and foundation
  • Security – the house needs to have locks on windows and doors

Integral issues for appraising

  • You have to know the condition and the subsequent ratings of the properties condition.  The rating scale goes from C1-C6.  One is the best and 6 is the worst.  Speak with the appraiser in terms of the condition to get more value for your clients
  • You also have to know the quality of the construction in order to help get more value.  Was the home custom built or was it a cookie-cutter built in the late 70’s with 7.5 foot ceilings?  These rankings range from Q1-Q6

As you see, it is extremely important for you to be a professional agent, do you job thoroughly for you clients and get the results that everyone is looking for from the appraisal process.  Get it?  Got it?  Good!

Now, go sell something!

Scott MacDonald

RE/MAX Gateway, LLC

 

Selling your home? Avoid these mistakes!

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Top 12 Seller Mistakes and how to avoid them if you are looking to sell your house:

  1. Selling on your own.  There have been so many changes in financing, contracts, and regulations that it is difficult to keep up with if you are not in the business learning and keeping up with these changes you can get burned at the last minute.  How will you navigate the process when things go wrong with no experience in how to handle the types of problems?  The business is changing exponentially virtually daily.
  2. Not hiring a true professional.  A true professional in the business is someone who is actively selling houses and participating in continuous training – not just someone with a license.  Nearly 40% of licensed Realtors did not sell a house in the last 12 months.  Be sure your agent is a true professional who is keeping up with the changes in the market, trends, contract changes and all other aspects of the business.
  3. Not listening to the advice of your professional.  Some owners will hire an active agent in the business, listen to their advice but then take over “the driving” of the listing by dictating the pricing, condition, showing details, negotiations, etc.
  4. Not hiring a stager.  Some sellers fancy themselves as decorators, interior designers, etc. saying they know how to put their property in the right condition to sell – well, it doesn’t help in most cases.  If your agent isn’t an Accredited Staging Professional – hire one and do all that they tell you to do to sell your house.
  5. Not doing what the stager or professional suggests.  Yes, some people will hire professionals and not take their advice or delay in making the changes suggested.
  6. Not following the advice of feedback presented by agents who show the property quickly or in a timely manner.  Agents who are actively previewing or showing properties have the best perspective on the market.  Their buyer’s feedback is the heart of the market and its conditions so their input should be carefully considered and followed – with the advice of your agent.
  7. Not maintaining the “right” condition of the property during the sale process.  Many times, especially as time goes on in the marketing process, sellers won’t make beds, load the dishwasher, keep the blinds open, etc. and that is when the property will be shown.  It is a difficult process but it must be followed because you don’t know when the next showing will occur.
  8. Pricing the house a little high for negotiations.  Pricing is extremely critical.  What happened last month, last year or when you bought your house doesn’t matter in today’s market.  Buyers are looking for houses that are priced right – which in many cases, is a little below what the last sale was in the neighborhood.  Pricing a little low may also generate multiple offers and allow you to attain a higher sales price.
  9. Not utilizing a lockbox to grant access – appointment only will hurt the number of showings and thereby extend the length of time the property is on the market which will lead to frustration on everyone’s part.
  10. Not leaving during the showing process – it is uncomfortable to the buyers and they won’t provide the best of feedback.
  11. Not negotiating contracts that come in – no matter how low.  Sometimes buyers or their agents will see how low they can go before they will agree at a reasonable price and terms.
  12. Not making the contract work and get to closing.  Often times both buyers and sellers will need to negotiate all the way to the closing – home inspection items, HOA violations, appraisal issues, title issues, and so many other things can become stumbling blocks.  Remember to keep your eye on the end goal of selling the house.

By avoiding these costly mistakes, you can get your house sold in virtually any market in a reasonable time.