|
 |
|
Buying a Home
The Appraisal
by Dick Lepre, Homeowners.com |
Getting a mortgage requires the work and cooperation of a fairly large number of people.
From my experience, one of the least appreciated groups of people involved in the process
is appraisers.
If you want a mortgage loan the lender wants your
home as collateral. The task of the appraiser is to estimate the market value of your home
so that the lender can decide if it provides sufficient equity.
Appraisers are licensed by the states. They take
classes and have to pass a test. They present their credentials to lenders and strive to
be on the list of approved appraisers that many lenders have. This makes their appraisals
more "portable"-a valuable asset to a mortgage broker who wants to take the loan
to the lender with the best rate.
Appraisers are divisible into several sets. There
are commercial appraisers-they appraise large commercial properties such as office
buildings, shopping centers, mobile home parks and other sorts of commercial properties.
The appraisers that we are concerned with are those who do residential properties. These
are one- to four-family homes.
Some appraisers work for lending institutions. Others work for themselves and serve the
lending community in general and are usually called "fee appraisers" as they
charge a fee for each appraisal.
Work between the loan officer and an appraiser may begin soon after the borrower contacts
the loan officer seeking a loan. If the transaction is a purchase, the buyer is helping to
set the market and, in general, the appraisal will come in at almost exactly the purchase
price. Exceptions may occur if the buyer is paying much more or much less than other
comparable sales would indicate. If the transaction is a refinance, the loan officer will
usually seek the an appraiser's estimate as to whether the property is worth enough to
support the loan.
Appraisers start with the specifics of the property:
location, lot size, size of the gross living area, number of bedrooms, size of the garage
and any amenities. Generally, the appraiser has access to an online data base or perhaps
CD-ROM's with data on recent sales in the area. The more recent sales there are of similar
properties in area of the subject property, the easier the task. Homes in newer
subdivisions, having identical plans are easier to appraise than, say, homes of the block
where I live in San Francisco where no two houses are the same.
Appraisals in rural areas are generally more difficult than those in urban areas. One of
the more difficult situations are areas when a number of new homes have been custom built,
are probably very expensive, totally different one from another and-because it is a new
area-there have been no sales. In a situation such as this the appraiser may have to go to
a similar area miles away because it represents the most recent similar area in where
there are some sales comparables.
What the Appraiser Does
Only a small portion of their work an appraiser does on a given appraisal is the
inspection itself. When an appraiser schedules an inspection he will look in his data base
and try to find perhaps six comparable sales. He will then come to your home, ring your
doorbell, ask for a check, and then measure the size of the rooms and make a sketch. This
is what solicits the gripe I often hear from borrowers: "Hey, this guy was here for
less than 10 minutes and charged me $300-what a rip-off." This is unfair. At the
point where he leave your home the appraiser's job is still in the early phase. He then
photographs the outside of your home, a street scene, any views that may support his
allegation that the house has "a view" and then drives around and photographs
the other six potential comparables. At this point his thinking may change accordingly, as
the perception that he formed in his office is tempered by reality. In this case, he may
need to come up with a new set of comparables.
MORE » |
