Article by, Lester Caplan, SCREA, CA State Certified General Appraiser
·The quality of an appraisal improves when the appraiser has more information. The more information agents can give appraisers, the better we can do our job. Higher-quality data put into the Multiple Listing Service (MLS) by agents will translate into a better analysis and a higher-quality appraisal report. Better data could improve appraisal turn times, which would help agents close the deal quicker. More reliable data would not eliminate the dreaded verification calls but might make them less frequent and quicker. Good data can help the appraiser with the process of making sure that the best comparables are selected.
· Don’t just provide the highest comps. Sometime the highest comps convert to a lower value estimate when properly adjusted. Rather explain the character and condition of all sales nearby that the appraiser is likely to find in their research. If there is a low sale next door explain why this property is inferior to your subject property. Agents go through lots of homes and hear a lot of things. They can sometimes explain why a sale was low due to marketability or condition issues not reported in the MLS that the appraiser may not be privy to.
· MLS data accuracy is important. Lot size, acreage (in some areas), square footage (GLA), year built, neighborhood name, and school district are important. If this information is wrong, the MLS records likely will not display correctly when searched and good viable sale comparables might be missed. I can’t tell you how many times I searched for sales in a particular neighborhood and a very similar property was missed because the Realtor put an extra number in the square footage like 11,750 when the house was actually 1,750 square feet and the house fell outside of my search criteria. Accuracy matters.
· Take photos of the street in both directions, all angles of the exterior, all bathrooms, the kitchen, bedrooms and the living area at a minimum. Buyers want more photos when they’re looking for a home. Appraisers want more photos when they’re trying to select comps. Also during the appraisal process when I am making adjustments and rating comparable properties I pull up the listing of each comparable an make a careful examination of each photo to determine how the quality, design & appeal, condition and level of upgrades compare to the property I am appraising. Also if there is damage, take a picture of it.
· When you combine contributory structures into the listed gross living area (GLA) when it is livable area, report the size of the contributory structure in the comment section. Appraisers sometimes need to value the main house at a different contributory value than the guest house etc. This helps the appraiser more accurately do their appraisal.
· It is always a good idea to provide the appraiser with an Updates/Features sheet and it is required If the home is a flip that sold in the year prior the valuation date since the appraiser is required to report on physical changes to the property that occurred between the two sales.
· Return calls as soon as it is convenient when an appraiser has questions about sales that are being used as comparables. Most of the time the appraiser is in the final stages of the appraisal process when they are calling and the appraiser is usually on a very tight lender prescribed deadline. Also remember that even thou the appraiser is most likely calling about a property that has already closed so they are not calling about “your deal” it’s is somebody’s deal. What goes around comes around. So it really is in your best interest to help appraisers as much as you can. Your fellow agents will help out when it is your deal that needs to close.
· Include the pre-listing comparative market analysis (CMA) and any other comps you wish to provide when the appraiser calls to set the appointment.
· Understand basic FHA issues like peeling paint, wood to ground contact and open electrical boxes and other items needing to be fixed.
· Provide appraisers with pending sales prices on relevant comps when they have that information. Agents have a duty to keep information confidential. However appraisers are also under strict confidential requirements and the Gramm-Leach act. So appraisers do not share the pending price with other sales agents which would be an ethics violation because it could jeopardize future negations if your sale fell out of escrow. Disclosing pending sales prices is proper since the appraiser is under strict rules of where they can disclose that information. They can only disclose that information to their lender/client. When the listing agent won’t share it with the appraiser it can have a very adverse impact upon the final appraised value estimate. This is especially true in a rising market because the higher pending sales will be utilized to make market condition (time adjustments) to the older, lower closed sales. We have all heard of “low ball” appraisals where the appraised value came in lower than the sale price. Often times it was the result of an appraiser not able to get current sale prices on pending sales to support a value estimate higher than the recent closed sales.
· When selling a multi-family property, include the current rents. It’s one of the most important pieces of the puzzle, on the appraisal of a multi-family property. It is left out way too often.
A few other quick tips
· Take care of repair items that are intended to be repaired before the appraisal inspection.
· Garage Count: List the number of cars based on the number of “doors,” (not the number tandem cars) additional parking in the garage should be listed in the comments.
· Attics, basements and garages are not GLA.
· Help appraisers help you. If you are producing inferior work (MLS data, photos, etc.), appraisers are using inferior data in their reports.
· Highest sale properties: the highest sale, even in a rising market, is going to get additional scrutiny by the lender, so if the agent has that particular sale, the more information they can give appraisers the better. The more information we have about the transaction and market data, the more accurate our value opinion will be.
What Appraisers Wish Agents Knew
· Appraisers are bound by the Uniform Standards of Professional Appraiser Practice (USPAP).
· Appraisers do not determine value by price per square foot.
· Appraisers would like mandatory reporting of sales concessions in the MLS since we are required to report sale concessions.
· Appraisers must verify information.
· Cost does not equal value.
· Appraisers don’t make value. They only gather data, analyze the data and report their findings.