Whether the purchase or refinance of a home, where mortgage financing is involved, you can be sure an appraisal will be required in the vast majority of cases. With very few exceptions, homeowners or homebuyers seek to obtain the highest and most accurate appraised value of the property. So what steps can one take to assure that this value comes in? Here are a few tips from the experts:
- Choose your lender very wisely. Why? Because since the implementation of regulation (including the Home Valuation Code of Conduct or “HVCC”) dating back to 2009, most of the mortgage industry has been required to use an appraisal management company (AMC) to place and fulfill appraisal orders. The AMC forms a third-party buffer between the appraisal and the bank, and the intent is to dissuade undue influence on the appraiser from the parties of the transaction. One of the unfortunate byproducts of this structure is that some AMCs will contract with appraisers from outside of the area of the subject property and their lack of local market knowledge can adversely impact the appraised value of the home. Throughout populated areas of California, we use local appraisers whenever and wherever possible.
- Before the appraiser arrives, clean the house and yard. The appraiser may take many pictures of many rooms. The cleaner the home the better it shows, and the higher value you will get. If you own several vehicles, move them away from the property while the appraiser is there.
- If you have the sketch page from a previous appraisal, give it to the appraiser. This can help save him or her work and time.
- Prepare a list, including cost estimates, of improvements completed to the property in the last year. If any updates have been completed to the kitchen and/or bath within the past 15 years, include them also.
- If you, or your Realtor, know of a good sale (or two) in the area within the last six months, you can give the address and sales price to the appraiser.
- Tell the appraiser the predominant feature of your home — the reason you bought it and the characteristic a future buyer may find most important and desirable.
- Be mindful of “health and safety” issues, regardless of how trivial they may seem. An opening in a wall, water stains on the ceiling, a disconnected faucet, peeling paint in a room that is lightly used or a missing banister on a staircase may all seem trivial, but they could require notation in the report. And once reviewed in underwriting, you may find that your loan approval then becomes contingent upon repair of these items and a reinspection by the appraiser (Form 1004D or Form 442) to confirm the work has been done, all at your additional expense and effort. Make the small repairs in advance (or have the seller do so), even if it means hiring a handyman.
- Know the law. Here in California, carbon monoxide and smoke detectors must be installed to code. If you have a water heater, it needs to be appropriately earthquake strapped. Like with Point #7, omissions of these details could delay your close.
Stacking the deck in your favor using the tips above, and working together with us before and after the appraisal is complete, you can maximize your potential to attain the highest value. This can then open up financing options and opportunities, and even factor into the interest rate you’re able to obtain. When you are refinancing a home, the home’s value relative to your existing loan balance determines your eligibility. When you are buying a home, you and your Realtor will want to know the appraised value supports the contract price. In both instances, if you have questions about the appraisal process, and especially if you have concerns about your subject property’s value, I am here to help.
Vice President of Mortgage Lending
Cell/Text: 415-367-5959 Fax: 415-366-1590
Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709
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