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Help the Appraiser Kill Your Deal

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Recently the Home Valuation Code of Conduct (HVCC) has been blamed for being the main reason appraisal values are low. It definitely hasn’t helped the situation but doesn’t hold true for every home. There are other ways to negatively impact the appraisal:

Let There Be Light

Having a home show well isn’t only for buyers. Open windows to let in sunlight and make the house feel bigger. Get rid of any unwanted odors as it could lead the appraiser to believe there are underlying issues.

Cleaning Up

Appraisers can easily look past minimal clutter or boxes being packed. But having storage areas or entire bedrooms that aren’t accessible just won’t fly. A clean and de-cluttered home will leave a good impression, which can translate into a higher value.

Not Fixing Problems

Depending on the type of loan the home may need to be checked for additional items. Generally speaking for an FHA loan, anything that represents a health or safety issue will need to be remedied. In today’s market a lot of foreclosed homes are missing pipes or have broken windows. Some even have the utilities turned off but these need to be operable. The loan won’t be approved without these issues being handled prior to closing.

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Minor cosmetic issues won’t usually be a problem. But peeling paint might be lead-based if the home was built prior to 1978. To see all the FHA appraisal guidelines visit HUD’s website.

Annoying the Appraiser

Yeah I said it – just leave them alone. Many homeowners feel the need to follow the appraiser around like a lost puppy. Asking a few questions is fine, just don’t go overboard by trying to learn the entire appraisal process in 30 minutes.

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Written By

As the son of two music teachers, Ben spent his first 21 years trying to make a living with his slightly above average trumpet playing. After no return calls from Dizzy Gillespie and then a failed attempt at becoming a fly girl on "In Living Color," he switched gears and finally found his nichè in real estate. He's a Minnesota appraiser and also a Realtor with his better half, Stacia. Labeled “one to watch” from an anonymous source (thanks mom), Ben is smart, good looking, athletic and a rock star inside his own head. He also never passes up a chance to write his own bio. Find him online at twitter or selling Stillwater Real Estate.

21 Comments

21 Comments

  1. Matt Stigliano

    August 14, 2009 at 10:05 am

    Ben – Although I know what you’re saying with “Annoying the Appraiser,” but I have to say that if appraisers are actually being affected by that they should be looking for a new job. They are supposed to be impartial and work off of logic and rational thought. If they don’t know how to say “I have a job to do, so I’m going to excuse myself from this conversation,” then they need to work on their people-skills. Sure, many of them would be affected by your scenario, but it’s ridiculous – that’s like saying a real estate agent should dump anyone who ask questions.

  2. Ben Goheen

    August 14, 2009 at 10:26 am

    @rerockstar – While it doesn’t happen very often, occasionally I’ll get a homeowner who just hovers over me. I don’t have a problem answering questions, it’s just the few people that constantly ask about every little thing I do during the inspection that make it difficult. People used to try to help by holding one end of the tape measure, a few without even asking if they could do it. But I don’t see this anymore since I switched to a laser tape measure.

    FYI – I consider myself one of the more social and easy-going appraisers out there. If you read the comments on https://appraisersforum.com/ you’ll see that there are many who need to work on their people skills.

  3. teresa boardman

    August 14, 2009 at 2:21 pm

    very nice. sometimes we forget that the appraiser is only human.

  4. Bob

    August 14, 2009 at 9:39 pm

    For me it depends on the scenario. I want my short sales to appraise low when the lien holder is the one asking for the appraisal, and I want it higher for the buyer’s appraisal.

    Staging works both ways. Get the approval, then tidy up.

  5. Gwen Banta

    August 15, 2009 at 1:19 am

    Great advice, Ben. The “cleaning up” part is a problem if you are selling a building with tenants. Last month I actually PAID tenants to clean their unit. They were so dirty that I had to weigh the cost of cleaning VS the cost of possibly losing the deal. It hurt, but it paid off. We can never underestimate the value of the Visual.

  6. Gordon Baker

    August 16, 2009 at 1:24 am

    Ben,
    Thank you for the reminder on various issues. I’ve resorted to taking pictures of bank owned comps that I know will be used in an appraisal to highlight the differences when compared to my listing, especially when the comps only have 1 or 2 pictures.

  7. Mack Perry

    August 18, 2009 at 9:47 am

    Ben, how do you feel about appraisers that do not listen when you make them aware of system problems (IE HVAC and Water Heater). Please feel free to read this article and let me know what you think.

  8. Ben Goheen

    August 19, 2009 at 2:18 am

    Mack: Per FHA guidelines, all utilities need to be in working order and tested before closing and basically his report states this fact. Since the appraisal has to go through underwriting (which is becoming increasingly difficult these days) it’s best to inspect the home and write up the report like he did. Otherwise he’d be waiting for all the repairs to be done and holding up the qualification process even more.

    I don’t know your market but the $900 difference does seem unwarranted. And yes he should have used the spell check function (probably built into the software) – not really a big deal.

    Are you sure that you’re reading the appraisal report correctly with regard to the bedroom/bathroom issue? The improvements section on page 1 of the Uniform Residential Appraisal Report (URAR) shows the finished area above grade. They actually use bold on the form also to bring attention to it. Since I don’t know the style of the home I can’t tell you if he reported it correctly. I do know that I’ve had a few homeowners over the years call me and complain about the same issue – I only reported 2 bedrooms and 1 bathroom. With a home that has a basement, the below grade rooms are not shown in this section. I report them in the Sales Comparison grid on page 2 of the URAR but some show it elsewhere.

    I have the same remark as your commenter – I’ve seen many far worse appraisals. I personally don’t agree with the way you’ve decided to call this guy out and potentially harm his business where it may not be warranted. IMHO, the crass nature of your blog post makes you look worse than the appraiser.

  9. Mack Perry

    August 19, 2009 at 7:35 am

    Ben, I guess you had to be there to experience this idiot.

    You stated: “Per FHA guidelines, all utilities need to be in working order and tested before closing and basically his report states this fact.” Here is exactly what he wrote in the appraisal: “HVAC was checked. Heat was not checked due to the temperature being over 90 degrees on the day of inspection.” His stating that HVAC was checked means nothing especially since he was advised prior to the appraisal that the A/C compressor motor was frozen up and the fan blade on the top of the outdoor compressor would not even turn. He was also advised that the furnace was inoperable yet he elected to state the heat was not checked.

    Here is what he said regarding repairs: “Estimated cost to cure is approximately $300.00.” He was only off a little bit. Here is the info from the listing agent regarding repairs: “The total amount on the repairs is $4,138.” You stated, “Since the appraisal has to go through underwriting (which is becoming increasingly difficult these days) it’s best to inspect the home and write up the report like he did. Otherwise he’d be waiting for all the repairs to be done and holding up the qualification process even more.” His refusal to confirm that the HVAC system in this home was inoperable is the reason the closing was held up for 3 weeks. So I respectfully disagree with your statement.

    You state, “Are you sure that you’re reading the appraisal report correctly with regard to the bedroom/bathroom issue? The improvements section on page 1 of the Uniform Residential Appraisal Report (URAR) shows the finished area above grade.” This home is a split level home with the middle section being on a crawl space and I confirmed with another appraiser that it would all be considered above grade. So YES, I believe it to all be above grade with this appraiser missing a bedroom and a bathroom.

    Finally, you wrote: “I personally don’t agree with the way you’ve decided to call this guy out and potentially harm his business where it may not be warranted. IMHO, the crass nature of your blog post makes you look worse than the appraiser.” I’m sorry that you have elected to defend a bad apple in the appraisal barrel. No one in this market deserves to go through an inaccurate assessment of features, systems or anything else with this guy. And by the way, thanks for giving my little blog post credit for being able to harm him.

  10. Bob

    August 19, 2009 at 1:06 pm

    I doubt the parties to the transaction thought Mack was being overly harsh or crass. The buyer paid for the appraisal. The delay costs the seller holding costs probably equal or greater than the appraisal fee.

    The market is hard enough and keeping deals together is as tough as ever. Justifying a poor job as “it could’ve been worse” is hardly reasonable when you are dealing with financial issues that are this big and important. All parties involved were entitled to a professional job, not guesswork. If he cant do the job correctly and competently, maybe he should consider a career that may be more suitable to the skillset he demonstrated as a carnie guessing people’s weight.

    As Mack said, there are incompetent/negligent appraisers just as there are incompetent/negligent real estate agents. Defending any of them them is bad for the pros in both industries

  11. Ben Goheen

    August 19, 2009 at 1:32 pm

    Bob: Without seeing the appraisal report and hearing one side of the story, you’re sure that this appraiser is incompetent? Pointing the blame when you know only some of the facts is irresponsible.

    I’m not justifying the report or defending anyone. Just pointing out areas of the appraisal report that aren’t apparent to someone who doesn’t look at it everyday.

  12. Mack Perry

    August 19, 2009 at 2:10 pm

    Ben: Without seeing the appraisal report and hearing one side of the story, you’re sure that this appraiser is Competent? Defending this guy while knowing what you know is irresponsible.

    This buffoon stated the condition of the subject property was average. However comparable #3 was good due to having new carpet and paint. Well bust my britches the subject property has new carpet and paint also. This is just another example for you to think about.

    FYI, I don’t look at appraisals everyday but I look at them often enough to know when something is wrong. Please don’t insult my intelligence stating that areas of the appraisal report aren’t apparent to someone just because they don’t look at them everyday.

    Please quit defending this idiot. So that you know, I have a great respect for competent professional appraisers and have established several very meaningful relationships with some of them. We communicate on a regular basis. In today’s market I even suggest that sellers obtain an appraisal prior to our placing their home on the market with me refunding the cost of the appraisal at closing.

  13. Bob Wilson

    August 19, 2009 at 3:16 pm

    I know Mack and his level of competency. I know he sent the appraisal to someone at the state board of appraisers and I know the response was that the appraisal was incorrect. I also know that the opinion of someone at the board was that the appraiser was an idiot, based on the appraisal.

    After 20 years, I know my way around an appraisal and I know Mack does as well.

  14. Chara Williams

    April 30, 2010 at 7:00 pm

    Hi,

    I recently found a townhouse and it was originally 32,500. Eventually it went down to 24 and now it’s 19,900. Every broker I went to said that the minimum was 50,000 or in some cases 30,000. I was told to go to a bank…So here we are. The loan officer said that the house must be habitable when the appraiser comes to take a look. The interior looks fine other than missing the kitchen appliances…however, the entire HVAC unit has been stolen. Would that be a deal breaker?? It’s not winter and Im sure I could survive until I was able to purchase one. In addition, the bank won’t loan over the amount of the house so there won’t be any “extra” money to walk away from the closing table with. Please tell me if the deal is doomed….thanks

  15. Ben Goheen

    April 30, 2010 at 9:11 pm

    Chara: You should probably be consulting your Realtor or a lawyer in your area, not relying on advice from a website.

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