You Need to Know how the Appraisal Process Works To Overcome Potential Problems

Copyright © 2014- 2019  AUTHOR: Paul R. Marino, REALTOR®, e-Pro®

 

Your home has gone under agreement, and you are moving toward the goal line. The game isn’t over, but you are in the 4^th quarter. You want to finish the process without any “snafus”, and you definitely don’t need a fumble this late in the game.

 

If you have not already done so, I strongly recommend you review my post entitled: “Essential Documents You Need To Compete as a Flat Fee MLS Listing”   When you first listed your property in the MLS [using the services of a Flat Fee MLS Listing Broker], you collected an abundance of documentation that has been used time and time again during the marketing process. You wisely assembled this information on the front end, and it was widely disseminated to Buyers and Buyer Brokers over the past several weeks.

 

By doing such a thorough job at the outset, you eliminated much of the needless “back and forth” that many inexperienced Sellers go through. Less savvy Sellers were constantly bombarded with inquiries, endless phone calls, and time consuming emails, with questions like: 1) How much road frontage is there?; 2) Where is the septic tank located?; 3) How much does it cost to heat the home?; 4) Is it legal to have an in-law apartment? On, and on, and on.

 

If they had supplied all this information as part of the listing package, they could have simply said: “It’s all in the listing package and marketing materials. Just use your phone to scan the QR code or “text” the number on the lawn sign”.  By doing so, they could have focused on showing the home instead of fumbling around looking for paperwork.

 

You only have one chance to make a good impression. Take the Buyer and Buyer Broker on a nice, calm, informative tour of the property. No drama. Unless the Buyer is paying cash, an appraiser will be walking through your property as the closing draws near. The appraiser is focused on completing the necessary data fields required on the Fannie Mae Form 1004 (the primary form used by appraisers in the vast majority of federally insured real estate transactions).

 

Bear in mind the appraiser is getting paid by the job. It’s very simple. The more homes they can inspect on any given day, the more revenue. Don’t make their job any more difficult (or time consuming) than necessary. You know from reading my blogs that “I tell it like it is.” Might seem harsh, but its best to face reality head on. While your home might be the “center of the universe” for you, don’t expect the appraiser to view your property in the same light. They are there to do a job. They don’t want coffee, or “chit-chat”, or to play with the cat. They’re professionals. Just the facts. If you need a friend, get a dog.

 

Be advised that before the appraiser even shows up on your doorstep, he/she has already performed more than half the work required for completion of the report. Make their life easy by following the recommendations in my blog of 4/20/2014, by providing the following, all of which has been posted in electronic format (PDF files) as part of the MLS listing process. The appraiser will be going into the MLS system and looking for these documents in advance of their visit to your property.

They include:

1. Thoroughly completed Seller Disclosure Statement (this is CRITICAL)
2. Current deed
3. Tax assessment card
4. Copy of a fully executed Purchase and Sales Agreement
5. Comprehensive list of all significant improvements (with cost estimates) since you owned the home

 

If you want to score some extra “brownie points”, have these available at the door:

1. Current real estate taxes
2. Census tract (just link to this free government web site)
3. FEMA flood map data (just link to this free government web site)
4. Formal zoning classification (ask your town assessor)
5. Plan of land (stake out the property lines for good measure)

 

If you posted these documents in your MLS listing, the appraiser will likely greet you at the door by saying, “Thank you for providing all the documents in advance. It will greatly speed up the process”. Like everybody else in this world, the personalities of appraisers vary. Some like to be left alone. Others like to be guided around like little puppies. Quickly surmise which type you have, and let them take the lead.

 

If you sense they are a “Stay out of my way” type appraiser, gracefully exit the scene by saying: “Very good…I’ll be in the kitchen if you have any questions or need anything”.  If, by contrast, you have a “puppy” on your hands, then by all means, take the leash and give them the grand tour.

 

Apart from the physical inspection, there is the critical job of selecting sold transactions and estimating a value. There is only one way this is accomplished. The appraiser will be looking for sales that have taken place in the past several months, in as close proximity as possible, with physical improvements that closely duplicate yours.

 

You should know the appraiser will be accessing the exact same database for sold comparables that you have access to. In CT, it's the SmartMLS database. MA uses MLSPIN. In NH and VT, their shared database is the NEREN MLS. And in ME, it's the MREIS MLS.

 

There should be no surprise which comparables are being targeted for use by the appraiser. You are both looking at the same data. If you have correctly priced your property, there will be no difficulty substantiating the value. After conducting your own search, print out six sold transactions that you feel are the most representative. Similarly, print out six active listings (properties actually on the market now) that do the same.

 

At the end of the appraisal tour, thank them for coming out, and offer a printed package of everything you have up on the MLS website. Then, calmly deliver this line: “As part of the package, I have included printouts for six sold listings, and six active listings that are quite similar to my property. You are free to take the whole package if you like.”

 

Most (smart ones) appraisers will take the entire package and thank you. Some may take the “attitude” that “I am the appraiser, and I will do my own work”.  No problem. Take what you want. Leave what you don’t. At least you offered. Only a fool believes they know everything. But don’t tell them that. Promise you won’t ask the classic rookie question: “So, do you think there will be any problem with the value?”

 

So there you have it. Be classy. Be professional. Keep your dignity intact. As I mentioned earlier; if you have correctly priced your property, there will be no difficulty substantiating the value.