. October 11, 2011, 6:06 PM ET.Ten Tips for High Value Home Appraisals.Article Comments (12) Developments HOME PAGE ».EmailPrintTwitter
Digg
+ More
close StumbleUponMySpacedel.icio.usRedditLinkedInFarkViadeoOrkut Text By S. Mitra Kalita
Reuters
Appraisal forms might not always capture a home’s true value, but there are ways to avoid disappointment.The appraiser was due in an hour. The beds were unmade, breakfast dishes in the sink and toys scattered about the playroom. Would she care?
I got moving—and cleaning. At 34 weeks pregnant, that’s not so easy.
After all, I know lowball appraisals can kill deals, something I’ve written about for The Journal.
They can also kill a refinancing application, which we are in the midst of for our 1920s Georgian-style house in Queens. If it comes in too low, it’s not worth refinancing or you might need to put in a whole lot more equity.
We don’t know how ours turned out yet but after talking to a handful of appraisers, I felt great regret at not doing more to plan and prep. Here are some tips based on those conversations.
Caution: Some of the advice—like home valuations themselves these days—might feel contradictory. But what they all agree on is to keep the look, feel and condition of the property as updated and cared for as possible.
1.Spruce the house up. But appraisers caution that you don’t need to deep clean under couches and that a few dirty dishes won’t hurt your value. Rats, cockroaches and that car you’ve been tinkering on might… “Things like overgrown landscaping, soiled carpeting, marks on walls — those do affect value and are part of the property’s overall condition rating,” said Dean Zibas, the president and chief appraiser for Zibas Appraisal in San Clemente, Calif. In other words, think broom clean, not set design for a home-decorating magazine.
2.Curb appeal also matters so mow the lawn, hack those weeds and trim those hedges. This can also help offset your house from unfair comparisons with foreclosures nearby. “In today’s climate I can’t stress enough condition, condition, condition,” said Doreen Zimmerman, an appraiser in Paradise, Calif. “An hour or two, for the most part, will set your home apart in the actual picture that the lender gets from the appraiser vs. the actual picture that the appraiser will provide of the (foreclosure) down the street.
3.Keep a list of all the updates you’ve made and be ready to hand it over; a sketch plan of the house indicating square footage also helps. “Have a list of updating done within the past 15 years. Itemize each update with the approximate date and approximate cost. Also highlight the notable features of the property,” says Matthew George, the chief appraiser of Eagle Appraisals Inc. in Denver, Colo. Remember the items that an appraiser might not notice, like a new roof or insulation. Don’t forget the minor items. For example, I mistakenly told the appraiser we hadn’t updated one bathroom but actually we had installed a new sink and had the tub sealed. That counts, according to the experts.
4.Have comps on hand. Yes, you say this is the appraiser’s job but every little bit helps, “especially if they are aware of a property that sold without the aid of a Realtor (i.e. for-sale-by-owner),” says Mark T. Smith, the owner and president of Smith Appraisal Services in St. Augustine, Fla. That can mean it wasn’t posted on the Multiple Listing Service, and result in other delays by the time it gets posted through other government data sources.
5.Be mindful of peeling paint. Government-insured loans such as FHA and veterans’ loans will require peeling paint to be removed in houses built before 1978. But don’t worry too much about a child’s scrawling on his bedroom wall, unless it’s going to require a whole new paint job.
6.Focus. “Don’t spend money that won’t yield a return on the investment. The best expenditures for most markets are paint, carpet, light and plumbing fixtures,” says Denver’s Mr. George. Prioritize what you do; if you’re the type of homeowner who has upgraded and fixed items as they broke, you should be fine.
7.Location still matters. If there have been changes to the neighborhood, mention them, from a new playground to a new Whole Foods. If the area’s just been declared a historic or landmark district, let the appraiser know.
8.Keep the $500 rule in mind. Appraisers often value houses in $500 increments so if there’s a repair over $500 that can or should be made, it will count against the property. Fix leaky faucets, cracked windows, missing hand rails and structural damage.
9.Also remember the concept of “effective age,” the age the appraiser can assign to a home after taking into consideration updating and condition. “Say you have a cracked window, thread-bare carpet, some tiles falling off the shower surround, vinyl torn in the laundry room, and the dog ate the corner of the fireplace hearth, these items could still add up to an overall average condition rating as the home is still habitable, however your effective age will be higher resulting in comparables being utilized which will have the same effective age and resulting lower value,” says Ms. Zimmerman, who wrote the book “Challenge Your Home Appraisal” and runs a web site by the same name.
10.Lock up Fido and Fifi. Appraisers say they get annoyed enough by homeowners following them around but a snarling, growling dog is even worse. Along the same lines, try to make the appraiser comfortable — if it’s cold out, put the heat on; hot out, the air conditioning. “If it’s 100 degrees out and you never put the air conditioning on, put it on for the appraiser so they don’t question that your unit is broken,” says Ms. Zimmerman.
With those things in mind, let the appraiser do his or her job. “Questions and banter may make the inspection go slow or make the appraise miss something,” said James R. Gerot, a residential appraiser in Ottumwa, Iowa. “My inspections have a rhythm to them so once I get started interruptions are just that. Save questions until after.”
Appraisal, Doreen Zimmerman, Eagle Appraisals Inc., James R. Gerot, Smith Appraisal Services
« Previous
Supreme Court to Consider Mortgage-Fees Lawsuit
Next »
‘Tough Year’ Ahead for Mortgage Lending
Developments HOME PAGEEmailPrinter FriendlyShare:facebook
MySpace
Digg
LinkedIn
del.icio.us
StumbleUpon
Add a Comment
Error message
Name
We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name. .Comment
.
.
Comments (5 of 12)View all Comments ».
9:37 am October 16, 2011
Dave wrote:
.I feel sorry for Zach, and believe he could benefit from a matchbook course in real estate appraising, as a start. Competent Appraisers are trained to be eyes and ears of the real estate market, listening, seeing, reading, viewing, accepting data from everyone, compiling information about the subject market that relates to the subject, and rejecting all that is not relevant.
Doing proper homework on comps, verifying their “arm’s length” transaction, is not a difficult task, just time consuming. The independence of appraisers arises out of how they treat all the data they receive, investigate, uncover, and analyze. Zach’s tub and sink issue is a micro analysis of a lengthy article with very apparent bias.
I began appraising in New England in 1984. I would have a wonderful time in court testifying in opposition to the comments by Zach. That HVCC is in force or terminated is not the issue. It is the aptitude and unbiased position of each appraiser. The industry is rampant with those that have neither, and lending institutions that use the cost of an appraisal and their own bias to choose appraisers. We cannot legislate morality or ethics.
.
8:27 pm October 15, 2011
Jon Putnam wrote:
.Zach: I agree with your thoughts on this article, and on HVCC in general. One small thing. It is perfectly acceptable to present comps to an appraiser. The appraiser must decide if the comps (or any other information) is relevant to the assignment.
.
5:55 pm October 15, 2011
DeeDee Riley, Realtor, El Dorado Hills CA wrote:
.Great input!
.
1:25 am October 15, 2011
Zach wrote:
.Felipe – Las Vegas poses a big problem to Las Vegas now days The appraisers just report market conditions. This is like saying the weather man makes it 80 degrees and sunny.
.
1:23 am October 15, 2011
Zach wrote:
.HVCC is not a problem. All of the brokers and lenders that coerced appraisers into inflating values was a problem.
The HVCC does have undeniable unintended consequences and the system could be better. The slant from the broker/lender community is so transparent it’s not even funny…they’re only upset because they can’t push appraisers to grease the wheels on their transactions. Any major lender that tracks their appraisal data will tell you that there is a lot more objectivity in appraisal values than there is in borrower’s estimates. How many borrower’s “estimate of value” is loan balance divided by 0.8? They estimate their home to be worth what they need to get a deal done…any lender has the data to show this.
I don’t know why this author feels so compelled to write about something he is completely unqualified to speak about. This article is absolutely ridiculous.
Added a new sink and sealed the tub? Are you kidding? Sealed the tub??? Ask 10000 appraisers and every single one of them will tell you sealing a bathtub will never make its way on to an appraisal report. Why? Because the appraiser has the luxury of inspecting every nook and cranny in the subject property, but has basic info (age, beds, baths, square footage, amenities, lot size, etc) for the comparables. How is an appraiser to gauge the typical buyer’s reaction to having a bathtub resealed or address the value of a new sink? We’re talking about a couple hundred dollars in general maintenance on a home that could be worth 1000 times that. I’ve heard about every argument, but this one takes the cake as the most ridiculous of all time.
Can you imagine the outrage if an appraiser made a negative adjustment to one of the comparables because they just put in a new sink and sealed their tub? This is where the double-standard of salespeople and borrowers becomes transparent. They want the appraiser to make positive adjustments for these kind of things on their property, but would crucify an appraiser for docking their value because a comparable had these things.
All features of a property are adjusted for relative to the comps. If you just dumped $50k building a 3-car garage on your property but all of your comps also have a 3-car garage, do you know how much that $50k adjustment will equate to in adjustments on your appraisal? Exactly zero.
The author also makes the profound statement that “Location still matters”. Really? Was that ever in doubt? Mention the new playground in the neighborhood? Why? If the comps are from the same neighborhood wouldn’t they benefit the same amount from the new playground?
Have comps on hand? I suggest Mr. Kalita get familiar with the Appraisal Independence Requirements. Suggesting comps to an appraiser is either (a) going to get ignore or (b) cause them to decline the assignment. How is pushing “comps” on them not attempting to influence value? I suppose we’re all to believe that the borrower will have access to local MLS, verify terms of these transactions, and verify with independent third parties? And, of course, the borrower is performing said search of MLS based on an objective analysis of market data and an unbiased view of their home’s physical characteristics? They would never search $300k-$350k and see what pops up and looks “similar”? If banks and investors want borrower-supplied comps, why not just let the borrower send to the underwriter?
The author continues to expose himself as the amateur that he is. Perpetuating these fallacies does more damage to the marketplace than the HVCC ever will. As a leading financial publication, I am shocked and disappointed that the WSJ continues to print these stories. And I say “stories” intentionally.
.Available to WSJ.com Subscribers
Subscriber Content Read Preview
Noonan: This Is No Time for Moderation Subscriber Content Read Preview
Deficit Panel Hears What Not to Cut
Congress's deficit-cutting supercommittee was deluged with recommendations on Friday. Unfortunately for the panel, much of it was advice about what not to cut.
Subscriber Content Read Preview
U.S. to Pursue African Rebels Subscriber Content Read Preview
China Cracks Down on Informal Lending About Developments
RSS The Developments blog features exclusive news, analysis and commentary on residential and commercial real estate from The Wall Street Journal’s real estate bureau. Send tips, comments and questions to developmentsblog@wsj.com.
Developments on Twitter
Developments on Facebook
Most Popular
ReadCommentedAll Blogs.1. Ten Tips for High Value Home Appraisals.2. Housing Inventories Hit Four-Year Low.3. 'Tough Year' Ahead for Mortgage Lending.4. Mortgage Rates Fall Below 4%.5. Could Refis Also Help Home Builders?.1.Ten Tips for High Value Home Appraisals12 Comments.2.Housing Inventories Hit Four-Year Low6 Comments.3.Survey Finds a Gloomy Outlook on Home Prices4 Comments.4.Only the Good Buy Young? 4 Comments.5.Real Estate Chart Wrap-Up2 Comments.
1.John Malone Now Biggest Landowner in the U.S..2.Bloomberg: Occupy Wall Street Can Stay Indefinitely.3.Tourism Remedy: 10,000 Free Flights to Japan.4.The Sleepless City.5.Google Crushes Estimates, Stock Soars.
. .WSJ Web SliceCONTENTLINKS TO ACTUAL PAGE CONTAINING WEB SLICE FUNCTIONALITY. 15
back to top
WSJ.com Account:
My Account
Create an Account:
Register for Free
Subscribe to WSJ.com
Sign up for WSJ Professional
Help & Information Center:
Help
Customer Service
Contact Us
Global Support
New on WSJ.com
Take a Tour
Print Subscriber Services
About:
News Licensing
Reprints
Advertising
Classifieds
Advertise Locally
Conferences
About Dow Jones
Privacy Policy - UPDATED 10/13/2011
Your Ad Choices
Subscriber Agreement & Terms of Use - Updated
Copyright Policy
Jobs at WSJ.com
Future Leadership Program
WSJ.com:
Site Map
Home
World
U.S.
New York
Business
Markets
Market Data
Tech
Personal Finance
Life & Culture
Opinion
Autos
Careers
Real Estate
Small Business
Student Journal
Corrections
SafeHouse - Send Us Information
Tools & Formats:
Today's Paper
Video Center
Graphics
Columns
Blogs
Topics
Guides
Alerts
Newsletters
Mobile
Tablet Edition
Podcasts
RSS Feeds
Journal Community
- Message Center
WSJ on Twitter
WSJ on Facebook
WSJ on Foursquare
My Journal
Portfolio
WSJ Digital Downloads
Digital Network
WSJ.com
Marketwatch.com
Barrons.com
SmartMoney.com
AllThingsD.com
FINS: Finance, IT jobs, Sales jobsBigCharts.com
Virtual Stock Exchange
WSJ Radio
Professor Journal
WSJ U.S. Edition
WSJ Asia Edition
WSJ Europe Edition
WSJ India Page
Foreign language editions:
WSJ Chinese
WSJ Japanese
WSJ Portuguese
WSJ Spanish
ACAP Enabled
Copyright ©2011 Dow Jones & Company, Inc. All Rights Reserved
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment