Here comes the Appraisal!

More than often in the last several years, home appraisal comes in lower than the contract purchase price, which creates another layer of trouble in the transaction process, or in some cases even kills the deal.

For sellers, as soon as the paperwork are all signed and before buyers start loan process, it’s time to prepare for an appraisal inspection.  It usually takes anywhere from 30-60 minutes to complete.  If you prepare well,  the process could move along as smooth as possible and you know the end result should be more accurate than the value of just another house in the neighborhood.

Preparing for the appraisal inspection:

• Create a detailed list of the recent improvements, which should include the following: when completed, cost of the improvement, before and after pictures if available.
• Make sure each room is accessible; the appraiser is required to inspect each room.
• If there is a crawl space, this area will also have to be made accessible for inspection for an FHA appraisal.
• Give the appraiser room to do their job. Errors are more likely to occur when the appraiser isn’t able to concentrate on their inspection.
• Keep all pets restrained, no matter how sure you are that your pets are friendly to people – it’ll be embarrassing and troublesome over even just a small incident.
• If you live within a development that has a homeowners association, have the name and phone number of the contact person available, along with a fee statement.
• If the appraisal is for an FHA loan, then the area leading to the attic will have to be cleared and made accessible-the appraiser is required to make at least a head and shoulders inspection of the attic area.
• Walk through each room and straighten up as if you were getting ready for company to visit. Appraisers are objective and can look past many things, however, the underwriter reviewing the appraisal photos may feel differently.
• Complete any unfinished projects-most appraisals are done “as is”, and any projects that haven’t been completed, will have to be adjusted for within the appraisal report.
• A copy of any agreements regarding easements (shared driveways and/or garages,etc.) should be made available.

Once the appraisal is complete:

You have a right to a copy of your appraisal, so ask for it. If you should find any errors or have any concerns, don’t call the appraiser, talk with your agent, (s)he will have the right channel to communicate the problem.  This is hard for borrowers to understand, being that they paid for the appraisal, but the buyers’ mortgage company is the appraiser’s client, and they can’t discuss the appraisal with anyone else unless given permission.

(courtesy of Michael S. Bolton-MN Appraiser@activerain)