Your home is on the market. You found buyers, a nice young couple just starting out, and they're sold on the home. But wait — there's one more person you have to sell: the appraiser.
You can no longer try to influence the professional who's responsible for placing a value on the house — a value that the lender must feel comfortable with if, for some reason, your buyers don't pay back their loan and the bank has to foreclose.
No, the days of MAI — which stands for Member of the Appraisal Institute but was euphemistically known in the trade as "Made as Instructed" — are long gone. But there is still plenty you can do to improve the chance that you will obtain the value you are looking for.
According to builders and realty agents, many a deal has been scuttled when lenders assigned appraisers who lived hundreds of miles away or were not familiar with the area. So after the appraiser calls to set up an appointment, check his or her bona fides.
FOR THE RECORD:
Appraisal tips: A Housing Scene column in the March 16 Business section on how to get the best appraisal for your house incorrectly identified John Brenan as director of appraisal issues at the Appraisal Institute. Brenan is director of appraisal issues at the Appraisal Foundation. The column also was incorrect in stating that the Appraisal Institute was created by Congress to set appraisal standards and appraiser qualifications. That description applies to the Appraisal Foundation. The Appraisal Institute is a professional organization based in Chicago. —
"The best way for owners to combat potential problems is to ensure the appraiser is qualified and competent," says Ken Wilson, president of the Appraisal Institute, a trade association based in Chicago. The organization was created by Congress to set appraisal standards and appraiser qualifications. "Consumers have every right to demand the use of someone with field experience in their market and knowledge to handle the assignment properly."
Ask your lender about the appraiser's professional designations. How long has he practiced? What level of experience does she have with your market and your type of property? Is he familiar with the neighborhood?
Of course, you spruced up the house when you put it on the market. You painted, perhaps, and you certainly fixed that broken window in the master bath. And you put away all that clutter in the kitchen.
Now make sure the house is just as dandy when the appraiser finally arrives. Tidy up. Get the dishes out of the sink and into the dishwasher. Clean off the counters. Pick up the dirty clothes from the bathroom floor. Change the furnace filters.
Also, send the kids off to the neighbors' or out to the movies, and lock up your animals.
None of this will add or subtract from the valuation. But human nature being what it is, it will convey the notion that the house is well-maintained, says John Brenan, director of appraisal issues at the Appraisal Institute.
Although you cannot try to directly influence the appraiser — offering a free dinner at his favorite restaurant, maybe, or a little cash under the table — you can speak with him. It's a myth that you can't.
"Conversation is not only allowed, but it is vital," Brenan says. "The appraiser needs to be able to discuss pertinent items about the house or contract."
When the appraiser arrives, present him with a list of everything in and about the house that you believe adds value — new windows, perhaps, or an addition above the garage. You are not trying to influence the deal, per se. Rather, you are "simply documenting," Brenan says. "You are not saying you need an extra $5,000 because you put on a new roof last year. You're just saying that you put on a new roof."
Your list should include a detailed description of any improvements or replacements, the dates they were made, who did the work (backed up by invoices to show they were done by a professional as opposed to a weekend do-it-yourselfer), a brochure to show the quality of the materials and building permits.
Also list any ways your house differs from others on your block: different finishes used, your better view, your larger lot size. "The list goes on and on," Brenan says. "You can't provide enough information about the house, the neighborhood, the schools. It will help give the appraiser a better understanding about the market."
Also give the appraiser a list of comparables, or "comps," which are similar properties in your neighborhood that sold recently. The appraiser may well already have the exact same houses, so at the worst, your list may be redundant. But then again, he may have only one or two.
Either way, Brenan says, "as long as you don't make any demands, a good, competent appraiser should appreciate" the help.
Some appraisers still balk at accepting such information. One recently told Jill Sackler, an agent with Charles Rutenberg Realty in Merrick, N.Y., that he was no longer allowed to do so. But Barbara-Jo Roberts Berberi, a Rutenberg agent in Crystal Beach, Fla., had the opposite experience recently.
The appraiser "was thrilled" with the list of comps Berberi provided, she said on the ActiveRain real estate chat room.
Berberi's list included an explanation of how it was created, a map and drive-by photos of the other houses. Her list was of houses built after 1990 (the subject house was built in 2002) that had between 1,800 and 2,890 square feet (subject was 2,360).
She also highlighted the per-square-foot sales price for each comp so the appraiser could see at a glance that the contract price for the subject house was just under the lowest price of houses that sold in the previous six months.
It took some effort on her part, Berberi said, but "it saved him some work and made both our lives easier."