What hurts a home appraisal? Myths Debunked
Home Buying Expert" is a made up title, with no actual recognized meaning. Perhaps Judy Dutton is an expert, but her credentials in the article are severely lacking. This does beg the question: Why are there so many articles that talk about how to help you appraisal, that don't interview appraisers? That aside, lets look at some of the statements of this Yahoo Article and see where they hold up, and where they fall flat.
"But is it enough to impress the home appraiser who’s come to assess your house’s value?" MYTH
This statement assumes that the appraiser should be "impressed" with your home. Strictly speaking, this is exactly what an appraiser is not supposed to be. A homeowner may be impressed with their home, and a buyer may be impressed, but "impressed" connotates the kind of emotional bias that an appraiser trys to avoid. The appraiser's role is to take factors into consideration and determine their market appeal. Frankly, a good appraiser/appraisal is a boring, disinterested, un"impressed" party. Its a "just the facts" kind of process. Side note: an "assessment" and an "appraisal" are not the same thing, but we assume that the article uses the word here in the more general sense.
“A home appraiser’s role is to determine a home’s value by investigating the property’s location, square footage, condition, number of rooms and any renovations or additions,” explains Dutton. “They’ll also look at recent sales of similar homes in the neighborhood.” TRUE
These are actual factors that the appraiser will take into consideration, among dozens more, like acreage, quality of construction, the location of finished area (below grade vs above), view, etc, etc.
"So, what are some of the key external factors they’ll consider? Like many parts of a home appraisal, much of this is beyond your control:"
Location - TRUE - the appraiser will consider the location. Is your home on a busy highway, or adjacent to the ocean.
Land Use - TRUE - this is taken into consideration and can become a problem for a loan closing. If your home is the last residence in a rapidly converting area to commercial use, then the best land use for your property may be that of conversion to commercial, in which case, the lender may choose not to write a loan on the property.
The size of your lot - HALF TRUE - your lot size is typically fixed if you have a small lot, but if you have a larger lot there may be a higher use for the property than simply having a big lot. Again, if the appraiser determines that the property is more valuable if subdivided, many lenders (under rules from FNMA) may not chose to lend on the property.
Access to public utilities - TRUE- access to public utilities is a lender question in many instances (even if the market doesn't care, or would prefer private well/septic).
Parking - TRUE - Properties with inadequate parking compared to the market can have a severe negative impact.
"As for internal factors, these may or may not be things you can change."
The year your property was built - Half True - while the appraiser will determine the age of the home (in part because FHA/USDA/VA financing has different requirements for older homes) this is not a significant factor in most appraisals. There was a time, prior to access to wide amounts of information being available where appraisers may have adjusted for the difference in the year built. However, in the modern day, with the rare exception of unusual properties, the data is nearly universally clear, there is not marketable difference between a 12 year old home and a 15 year old home, with all other factors being equal.
The roof and foundation type - Half True - Again, this is recorded by the appraiser, and is taken into the consideration of the condition and quality of construction, however, this is not a line of analysis in 99% of appraisals.
Square Footage - MYTH - While the square footage of a home is considered, this term is not used in the appraisal of real estate. Gross Living Area (GLA) equates to the square footage that is 100% above the grade of the soil. All other "square footage" is recorded elsewhere (basements, accessory dwelling units, etc). This term is too vague to be considered accurate.
Appliances - MYTH - Appliance that are not attached to the home are personal property and therefore NOT real estate, and therefore the lender and appraiser can not consider them in the valuation of the home. Common appliances that are not real estate but are included in sales are stoves, microwave, washers, dryers, refrigerators.
Recent renovations. They’ll particularly look at kitchens and bathrooms. - MYTH - the most common form used in real estate transactions asks the appraiser to report the age range of renovations/updates to the kitchen and bath, however, the appraiser actually looks at all of the renovations on the whole.
"While the buyer typically chooses the home appraiser" - MYTH - absolutely not. This is wildly inaccurate, and absolutely false. In a mortgage backed loan, the appraiser is chosen from a panel of approved appraisers by the lender or a third party.
"A good way to think of a home appraiser is to consider them a neutral party. Their number one goal is to confirm that the price of the home is fair to everyone." - MYTH - While "market value" might be "fair" to all parties in the deal, it is not our job to ensure "fairness."
Both a realtor and a home inspector are trained to foresee potential problem areas. - MYTH - Neither Agents nor home inspectors, have required training on the Fannie Mae Selling Guide or the HUD 4000.1 which define most of the problems that might come up in an appraisal.
“Any appraisal done before this point is somewhat pointless because if the buyer is getting a mortgage, their lender will want their own objective, up-to-date picture of your property’s value.” - MYTH - As we saw above, agents have 0 training in these areas, and 0 training in how to value real estate. If your property is at all complex it can save you thousands of dollars and many sleepless hours to get a valuation expert's opinion by hiring a qualified appraiser to perform an analysis of your home BEFORE you list your home.