Agents, this is a great resource for your listing kit.
The Murray Group is always being asked the questions below. Our in-house appraiser took a few minutes to help us pull this together for you today.
Can
the appraiser tell the borrower or homeowner what their house is worth
or a “ball park” number at the time of the inspection?
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| Appraisals consider all interior and exterior features of a home. |
A. The lender hires the appraiser to perform and appraisal on the property. This creates a fiduciary relationship between the lender and the appraiser. As
a result, the appraiser can only report any value conclusion directly
to the lender and must get permission from the lender to let any other
person or party know the results or value conclusion of the appraisal. This
means the appraiser cannot disclose any opinion of value (an appraisal)
to the homeowner without first giving the client (lender) the appraisal
first and getting permission from the client to tell the homeowner the
results of the appraisal.
B. When
the appraiser inspects the home or property, he or she inspects the
home, lot, floor plan, measures the house for the amount of living area,
basement, garage, etc. This is primarily a data gathering process. Furthermore,
there are many factors that comprise the properties market value such
as lot size, location, house condition, room count (number of bedrooms
and bathrooms, etc.), finished basement, etc. All these factors need to be adjusted for against other similar sales in the neighborhood or similar neighbor hoods. The
appraiser does not have all of the sales data available to him or her
at the time of the inspection and cannot make all of the necessary
adjustments needed to arrive at an opinion of value at the time of the
inspection. Therefore, any number given by the appraiser would probably not be accurate and should not be given.
Example: An
appraiser might think that a house is should be worth around $100,000
at the time of the inspection, but later finds two sales that just
closed in the neighborhood for $94,000 and $95,000 and a very similar
house that is listed for $97,000. Though
the appraiser was fairly close in thinking the house could be worth
around $100,000 at the time of the inspection, current market data shows
a value of $95,000 to be more supported by the market and concludes at
that number.
C. Taking
the above example a step further, if the appraiser would have told the
homeowner that their house was worth $100,000 at the time of the
inspection and later concluded the value to be $95,000, the homeowner
would be confused as to why there were two values given by the
appraiser. The result was that the appraiser legally gave two appraisals ($100,000 and $95,000) since an appraisal is an opinion of value. One is probably more accurate than the other, but two appraisals were performed. In
addition, the appraiser may be held liable for the $100,000 value even
though it was a guess and the home owner almost always says (“we won’t
hold you to any number, we just want a rough idea”). Any potential value provided by an appraiser is considered an appraisal since the appraiser is considered an expert.
How long is an appraisal good for?
Most lenders accept appraisals that are less than 6 months old. However,
with the current market conditions, housing and mortgage lending
problems, lenders may accept only more recent appraisals such as a 1-3
months.
What does the appraiser consider in an appraisal?
Everything about the property including:
The location of the property such as the neighborhood and what surrounds a house.
The site (lot size, topography, public or private road frontage, public utilities at the site, etc.)
The overall room count (the number of bedrooms, bathrooms, living room, etc.)
The condition of the
improvements (was the house recently remodeled such as new flooring,
kitchen, bathrooms, painting, roof, siding, etc.)
Basement area (finished or unfinished)
Quality of the
construction (cherry cabinets, granite countertops, hardwood or ceramic
flooring, brick siding, geo thermal heat pumps, etc.).
And other factors such as how many properties are listed for sale in the neighborhood, how many have sold, etc.
The Murray Group can answer your questions -
give us a call today!