An Insurance Agent or employee of an Insurance Company that insures real estate will need the services of a real estate appraiser that can provide appraisals for insurance requirements.

A FSBO is a property For Sale By Owner, implying that the property is not marketed by a Broker/Agent, and may not be listed on MLS. There are options between “selling it yourself” and hiring a broker to sell the home for you.  I would recommend asking about “entry only listings” and any other options the agent would be willing to offer. If you do decide to sell the property yourself I would recommend contacting a local appraiser.

As discussed in earlier posts an appraiser offers services beyond an appraisal of a property (an opinion of value) such as consulting. An appraiser can be hired to appraise the home, providing an estimate of market value as of the inspection date. Depending on the market trends the value may be very helpful for preparation of a FSBO. What if the market is declining, or appreciating?

An appraiser can also provide a forecast as supplement to an appraisal. In this process an appraiser will analyze historical market trends, and interpret current market trends to determine the likely future trend of value. Using this information combined with the likely marketing time (also based on analyzing of market data) can lead the appraiser to render an opinion of the Anticipated Sales Price which can help a homeowner price their FSBO. An appraiser can take into account any specific restrictions, such as a target marketing time of 3 months, that may affect your FSBO.

Another service of consulting that a homeowner may consider to support a successful FSBO transaction would be cost benefit analysis of possible upgrades and remodeling. This can actually be a great service for homeowners in general, but is particularly helpful for a FSBO. Perhaps you just gained ownership to a home that is not in the best condition, and you don’t know whether putting in new carpeting, redoing the bathroom, and replacing the rotted back deck benefit you financially when selling the home.

Using the example of the home in less than good condition above an appraiser would look at recently sold homes in your market area, taking note of condition between similar sales and how that condition affect sale price. Perhaps there are REOs (Real Estate Owned, property foreclosed on and owned by the lender)  selling in your subdivision in similar condition. It comes down to how much of a discount a buyer would typically seek for a home in the Subject’s condition as opposed to a home in renovated condition.

After figuring the buyer’s reaction the appraiser would then perform a cost estimate for the work, and compare the costs to the price at sale. If it costs $10,000 to rehab the home, and the market pays $20,000 more for a rehabbed home than it would be cost effective to perform the repairs. An appraiser has the knowledge and expertise to provide you with these vital answers. A proper valuation, with forecast if needed, and some quality consulting will be well worth it to any homeowner selling their home as a FSBO.

The first thing to get out of the away about appraisal inspections done by professional appraisers is that it is not a Home Inspection. Appraisers are not Home Inspectors, they are not Building Inspectors, they are not Structural Engineers and they are not Code Compliance Officers. They are appraisers!

An appraisal inspection consists of measuring the home, sketching the interior, taking pictures both inside and out, making notes of materials used, condition/quality, and functionality of the home itself. An appraiser is looking at things that affect market value. An appraiser is looking at your home as a “typical buyer” would as he walks through your property. Every buyer should hire a home inspector because they are specifically trained for the integrity of the home and its systems where as the appraiser is professionally educated to observe the property in the context of market value.

More on this later, just a quick explanation of an appraisal inspection, when an appraiser inspects your home and how it differs from a Home Inspection from a licensed Home Inspector. Feel free to ask questions in the comments below.

“How much is my house worth?” is a common phrase I hear as a local real estate appraiser here on the South Shore of Massachusetts.  Many homeowners may not understand the process of home valuation and what exactly an appraisal is. The fact is that a real estate appraisal is an opinion of value. This is only one type of answer to the question of how much a property is worth.

For the typical homeowner who is curious about their home’s value there may be a reason. If the homeowner is thinking of selling their home I would recommend they contact a local real estate agent. As part of an agent’s effort to gain the right to list your home, and make a commission if it sells, they perform a type of valuation commonly known as a CMA (a comparative market analysis.) If you, the home owner, are planning on selling than you should call at least 3 agents and have them come to your home. The better agents will actually inspect your home personally and provide you with a CMA next time they see you (or perhaps the results over the phone.)

A CMA is, compared to an appraisal, a simplified Sales Comparison Approach. Basically speaking they research homes that are active listings or have recently sold and list them side-by-side with your home. They then make an estimation based on the differences between your home and the other homes they chose for the CMA. Again, these are free reports prepared by agents hoping to gain the homeowner’s business. Obviously a homeowner wants to sell their home for as much as possible and this fact may skew the results of an agent’s CMA. It’s rare but some agents may inflate the estimation in hopes of being hired. The vast majority do not, because they are real estate professionals, like appraisers and real estate lawyers.

Another CMA type report out there that values homes is called a BPO. Again this is performed by an agent who hopes to gain a listing. The Broker’s Price Opinion differs from a CMA as an agent is usually payed for their report. This is a slight conflict as some banks have hired agents to do BPOs when the agent knows there is little to no chance that they will list the property. A BPO costs dramatically less (anywhere from 15 to 100 dollars) than a real estate appraisal, and is simplistic in comparison. If you’re a homeowner you should get a CMA, they are free, do not pay for one!

The reason that some lenders and other companies have a BPO done on a property that they are either managing after foreclosure or planning on foreclosing due to non-payment of the loan, is money. While some BPOs done by professional brokers/agents can be a reliable indicator of value, albeit presented simply without detail, the ones that cost $20 dollars are likely worth exactly what is paid for them. These entities may not care about actual quality of the valuation, they may just need a piece of paper in their file that mentions the value of the property… so why pay 100s of dollars more for a valuation from an appraiser?!

The reason I would suggest an appraisal is due to the detail of the typical appraisal report, the qualifications of a professional appraiser, and the fact that an appraiser is not biased by any potential job to be gained (a listing for a broker) and can provide an actually bias-free and well supported opinion of value. To those that want such an opinion, those who want a professional and independent answer to the ever popular question “How much is my house worth?” the real estate appraisal, as prepared by a local and competent appraiser, is the best answer and worth any money spent.

So, depending on what you are doing with your home and what you want the valuation for, an appraisal is probably the right answer. Contact a local professional appraiser today!

Homeowners should be aware of appraisers, and what they do. Although most homeowners may have had an experience with appraisers, not all necessarily have a chance to interact with one. Some homeowners may not even think about appraisers, appraisals, and how they affect them during some important transactions.

During a purchase

A typical homeowner may not ever really notice an appraiser when purchasing a residential property.  Even if the homeowner finances the home through a typical lender or mortgage broker, and an appraisal is required by that entity for the loan, the appraiser would inspect the home prior to the actual purchase.  This is done by contacting a listing broker, if sold via a local MLS, or by contacting the current owner to facilitate an appointment for property inspection.

If a property is vacant, or the listing broker shows the home to the appraiser when the sellers are not present, that is one more lost opportunity to see an appraiser in person. Unless there was an issue of a value lower than the sale price, which isn’t exactly uncommon these days, the buyer would never have a reason to even consider the appraisal.

After purchasing

That same buyer whom did not interact with the appraiser when purchasing and originally financing their home, may not run into an appraiser if they choose to refinance their home subsequently. Depending on the specifics of the loan, including type, length of term, and amount, and the homeowner’s credit worthiness, an appraiser may not need to perform an interior inspection of the property.

3 ways an appraiser will benefit homeowners:

• Appraisers offer valuation products including exterior only appraisals, commonly referred to as drive-by appraisals. In some cases an appraisal isn’t even required for the transaction. Although it would be commonly thought that a lender would want an appraisal to protect the health of the loan, it may not be required depending on the specifics.
• Appraisers can provide helpful and insightful services for the typical homeowner that do not involve a lender or mortgage broker.  Around this time of year taxes are a subject in the foreground for many families, including homeowners. As part of the process of appealing the property taxes imposed by the local town via the assessor a homeowner may hire an appraiser. In such an example the homeowner may hire the appraiser to take a look at the assessment, looking for errors in the data including the description of the home. An appraiser may even perform an appraisal as part of the tax appeal process. I will be sure to go into detail regarding tax appeals in my next blog post.
• By contacting an appraiser prior to undertaking any home renovations, a real estate appraiser can provide consulting of a professional nature, based on your local market. An appraiser will research your local real estate market for specific data regarding an upgrade or addition and how it affects value. As an example a typical homeowner may want to add a deck to increase the value of their home. An appraiser can tell you whether or not it is cost effective to do! With the popularity of real estate themed shows on TV, and a lot of talk regarding remodeling and increasing the value of a home it is important to consider what an appraiser can do for you. It is typical for these shows to feature a real estate agent, designer, or builder who make claims of increased value as a result of an upgrade, addition, or remodel. These are just a few aspects to think about when looking at the benefits of hiring a real estate appraiser.

If you have a real estate question it is probably one that a local professional real estate appraiser can help you with. Don’t hesitate to contact one next time you do!

The difference bewteen a real estate agent and a real estate appraiser is the fact that the agent wants to sell your home, or help you buy one. Either way they make more money the more expensive the house, resulting in a higher commission. 99% of brokers and agents fiercely defend and promote their client’s interest.

They are selling their services of representation to sellers and buyers. Real estate brokers and agents are advocating for their client.

An appraiser performing an appraisal provides an unbiased opinion of market value. It can be done for new construction (a home you plan on having built), your home before you see an agent about selling it (or after), and as a buyer you may have an appraisal performed to have a neutral party provide an estimate of Typical Market Value.

Trust your professional appraiser, they provide unbiased, supported and reasonable opinions of  properties in your local market. Having an independent and reliable estimate of value may enable you to be empowered when making a selling, refinancing, or buying transaction. Most appraisers, including me, offer consulting assignments as well that may or may not include an estimate of value.

Consulting assignments include the appraiser’s opinion on topics including:  financial feasibility of a proposed addition or added feature, neighborhood affects (such as a new school or business), local market trends, and much more.

Please, feel free to contact me via our contact form on www.JDAppraisal.com, or email at JDAppraisal@verizon.net

Thanks for reading, and be sure to comment!

Michael

Certified Residential Appraiser