HOME DESIGN : How a Veteran Appraiser Takes the Measure of a Home’s Worth

Armed with a clipboard, camera and tape measure, Harry Bolke scans his next appraisal on a hillside street in Lake Forest. The house is a two-bedroom, two-bath tract home built in 1987. It appears neat and well-kept, not much different from its neighbors. Bolke takes a photo of the front and a photo looking down the street.

So begins the work of an appraiser.

The appraisal is one of the rituals going on behind the scenes when a house is in escrow. While starry-eyed buyers, hopeful sellers and hungry real estate agents coo over the fine qualities of a home, the lender hires an appraiser to provide a more objective picture. Not only must the buyer qualify for the loan, the house must also pass muster with the lender at the selling price, which in this case is in the low $200,000 range.

Bolke, a self-employed Huntington Beach real estate appraiser, has set a value for roughly 10,000 houses in the last 15 years.

Rhonda Waxman, an agent for Century 21 Hillcrest Realty in Mission Viejo, accompanies Bolke. When one of her listings is being appraised, Waxman makes a point of meeting the appraiser to be sure he doesn’t miss any of the property’s amenities.

While Bolke works smoothly with real estate agents, he says he bases his ultimate valuation on how the house stacks up against three comparable houses or “comps.” He factors out the differences between the four homes to assure the lender that this property is worth the amount of money he’s being asked to lend.

“In appraising, the lender wants to know the truth,” he explains. “I’m not in the public relations business. I’m out to protect the person who pays me to do the appraisal. I’m paid to interpret the market data.”

As he explains the appraiser’s role, Bolke measures the “footprint” or area occupied by the home. The house sits on a level pad, but at the back there’s a steep slope to the next terrace. Bolke says he looks for indications of slippage of the hillside and he suggests sellers repair any damaged retaining walls.

Although this house doesn’t have a pool or spa, Bolke notes that this is one area where owners who add overly elaborate amenities to moderately priced homes can expect to lose much of their investment when they sell.

For example, adding a $40,000 spa to a $200,000 house is not seen as an asset, whereas for a $750,000 house it would be appropriate. In another case, “I had a guy in Fullerton who had a $90,000 condominium and he put in a $12,000 spa. He got about two or three thousand dollars out of the marketplace for it,” Bolke recalls.

If the spa suits the house, a gunite spa will carry more weight with the appraiser than a fiberglass spa. And an appraiser is not allowed to assign any value to portable spas because they are considered personal property.

While the work one does to make a home cosmetically appealing to potential buyers may not have much impact on the appraiser, primping the property will ensure the house is appraised favorably. Keep the plants and grass alive and well, Bolke suggests. Paint the house if it looks worse than other houses in the neighborhood.

This house has a red tile roof. “They last forever if you don’t walk on them,” Bolke notes. A composition roof will detract slightly from the value of the house if the comps have tile roofs.

After sketching the footprint, Bolke turns to the inside of the house. This house is undamaged and decorated in contemporary colors and styles, Bolke points out. The high-quality Berber carpeting remains in good condition, and the builders used parquet flooring at the entrance.

He takes three photos of the interior, then checks that the appliances work, the plumbing is in good condition and whether any walls are damaged.

While neglect will lower the appraisal of the house, tacky taste in decorating usually won’t. That’s the buyer’s problem, although if he doesn’t get a bargain on a house that requires repairs or redecorating, he could be denied the full amount of the loan he requested.

Satisfied he has covered the outside, Bolke moves inside the house.

Upstairs, where it is difficult to measure the outside of the house, he measures the inside and adds half a foot. Houses will sometimes vary from the model floor plan because a building lot may be slightly larger and the builder can charge more for the extra space.

Whereas a panoramic view--even if it’s just a peek--may be worth a couple of thousand dollars to seller and buyer, to the appraiser it has little or no value unless, for example, it’s an ocean view in Laguna Beach. Here in Lake Forest, one sees only a wedge of the Irvine Valley from the second-floor master bedroom.

“I’m not giving this one any more of a view adjustment,” Bolke says. “It’s got to be a full-on view or forget it.”

Bolke verifies there’s a smoke detector in the house. He explains that for fire safety reasons, houses that have windows with bars may cause a lender to balk at making the loan unless the bars have a quick-release feature.

Bolke finishes the appraisal in half an hour. He has no obligation to reveal the results of the appraisal to anyone but the client who pays him, but he reassures the real estate agent that the appraisal will be in line with the selling price.

This house done, Bolke sets off to see the comps.

To qualify as a comp for the lender, a house must lie within a one-mile radius of the home in escrow and must have been sold within the last six months. Ideally, the comps would be on the same block, on the same side of the street.

Using an appraisers’ index from the California Market Data Cooperative, Bolke has already identified the houses he can use as comps. He fills in a detailed work sheet that allows him to compare the comps with the sale house. He can adjust for the features unique to each and ultimately come up with a value for each comp in terms of the house he is appraising.

One of the comp houses backs up to Lake Forest Drive. Bolke notes a figure on his work sheet. “The street adjusts the price,” he says. “A busy street affects the appraisal value.”

He shoots a photo of the front of each comp. At two of the three comps he knocks on the door and talks briefly with the owners. He peeks over the back fence for any signs of upgrading that his research might not have uncovered. One comp sold for $15,000 more than the house he is appraising; Bolke assures himself the larger size of the house and the nature of its upgrades account for the difference.

Then he adds the columns. Each comp varies no more than $1,000 from the house he’s appraising, which is an acceptable figure.

For condominiums, he would look for two recent sales within the project and one outside the project to be sure the outside market supports the value of the unit. If the property were a rental, he would do a rental survey of the neighborhood.

While occasionally an appraiser will blow the call and a second appraisal is requested, the buyer should consider a low appraisal a signal to reevaluate the property. The lender, in protecting himself, may be keeping the buyer from paying too much for a house.