Challenge Your Home Appraisal
by Doreen Zimmerman
Smashwords Edition
Copyright 2011 by Doreen Zimmerman
All rights reserved.
No part of this book may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems, without permission in writing from the author excepting for samples of rebuttal language and the sample rebuttal letter for singular, private, non-profit use. There are no other exceptions.
Cover design by Doreen Zimmerman
Book design by Doreen Zimmerman
IMPORTANT NOTICE: This book is for educational and informational purposes only. This is not intended to be, and cannot be, construed in any form or manner a specific valuation consulting assignment , field or technical review or appraisal assignment as identified by U.S. Federal or any State regulations or guidelines for any specific property. Nothing in this book is considered to fall within USPAP, any U.S. Federal or State guidelines or regulations concerning the definition of an appraisal, appraisal assignment, consulting assignment or field/technical review. There is no stated client, assignment given, specific property stated, or any other information contained within which would render this book to fall under the auspices of USPAP, any U.S. Federal or State governmental agency or quasi government agency which oversees the real estate appraisal profession. The reliance on this book for any purpose other than personal education and/or information is strictly prohibited.
Any and all purchasers or readers of this book agrees without reservation, that upon possession of this book, that it is utilized for personal information and educational purposes only and is not to be relied on as a valuation consultant, appraisal, or field/technical review assignment in any capacity. The Author makes no guarantees, warranties nor representations as to the applicability of any verbiage contained within this book or any outcome of the knowledge obtained by the purchaser or reader. Any purchaser and/or reader agrees unilaterally and without reservation, to utilize this book for their own personal use for information and educational purposes and upon purchase, receipt, or possession of this book in any format or content immediately indemnifies, holds harmless and assigns no liability to the Author in any and all situations.
DO YOU KNOW WHAT THE NEW APPRAISER INDEPENDENCE LAWS MEAN TO YOU?
* Firewalls between your real estate agent and the appraiser
* Firewalls between your loan officer and the appraiser
* Firewalls between you and the appraiser
What are you going to do when your home value is appraised low?
Call the appraiser? Nope, you can't do that
Have your loan officer call the appraiser?
Nope, you can't do that
Have your real estate agent call the appraiser?
Nope, you can't do that
Challenge the value because it’s low?
Nope, you can't do that
DO YOU KNOW WHAT TO DO?
Do you know how to easily read your appraisal report and to look for
* critical errors
* omissions
* inconsistencies or fatal flaws
Challenge your home appraisal will arm you with all of the knowledge you need with a sample value reconsideration letter that you can edit for your own use and much more. With its easy reference, section by section review to cross reference the report where appraiser errors are commonly made, and fatal flaw alerts throughout, you'll be completely at ease and in your element when the occasion arises to defend your home value.
No fancy, boring, industry specific language that will leave you wondering "what the heck does that mean?" it's as straight forward as appraisal theory can get and an easy read which is packed with appraiser insider knowledge that no homeowner, potential homeowner, or real estate professional should be without.
Inside is a simple case study of an appraisal report, section by section, pointing out where the most common errors are made, a fannie mae data set glossary for acronyms, and a sample letter with extra samples of verbiage for you to tailor to your own needs when challenging your home appraisal.
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Table of Contents
WHAT IS THE APPRAISER LOOKING FOR?
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WHAT IS THE APPRAISER LOOKING FOR?
The properties in America are as diverse as Americans themselves. I have been an appraiser practicing in Northern California and Mexico for the past twenty years and there isn't any kind of property that I have not yet come across. From the smallest studio to the largest ten thousand square foot home, from the uninhabitable which was being lived in to the opulent which was vacant, I've seen just about everything. I've been attacked by dogs, cockroaches, and toddlers and have had to travel by helicopter with personal armed escorts to reach rural destinations. I've assigned a value to it all and my conclusion is that there isn't one piece of property in America that can't be appraised and that there isn't one appraisal that has made all parties satisfied. My areas of coverage include such diverse properties as densely populated urban areas to rural markets where acreage parcels range from one to five thousand plus acres. However, despite these diversities, the one common question that has been threaded throughout my career is the question posed by homeowners and agents alike "What are you looking for?" What a loaded question! As an appraiser, I am the eyes and ears of the bank. The bank is looking for the market norm, what a typical buyer would consider in your market. That being said, there is a range of "norm" within any market. Well defined neighborhoods have homes which have three bedrooms or four bedrooms, some have pools, and some do not. Others have converted their garages to family rooms. All of this within one small well defined neighborhood! What is the "norm" there? To answer the question, appraisers are looking for and at everything! Appraisers are looking for anything atypical, deferred maintenance and special features. Are the windows broken? Screens torn? Has the dog teethed on the laundry room door trim? Was your home built in 1980 and hasn't received an interior coat of paint yet? Does it still have the original appliances? Or on the other spectrum, have you installed quartz bathroom tile and shower surrounds? Replaced composition shingle roofing with tile roofing? Completely overhauled the kitchen with a sub zero refrigerator and a designer series, six burner stove and double oven? A competent and professional appraiser will be able to walk through your house and immediately take note of the pertinent items that the bank is looking for and that are to be noted within the appraisal.Is there any one thing a person can do to raise the value of their home? Typical maintenance, upkeep and updating throughout the years does it best. You don't want to over improve your home so that it’s above the market norm. In that type of situation you'd only lose the money you invested as there are specific theories that appraisers must apply to over improvements. You don't want to neglect your home to the point of it being obsolete. Deferred maintenance and outdated features will bring your value down. One thing that appraisers are looking for when they arrive at your home is unfettered access to all rooms, all animals restrained, and if it's hot out the air conditioner is on, and if it's cold out, the heat is on. Appraisers do expect you to live in your home, so some dishes in the sink or laundry waiting to be folded is not a big deal. You don't have to knock yourself out cleaning; however it would be a good idea to take care of any insect infestations. Cleaning up piles of newspapers, trash, hauling away broken down cars, household waste or any other eyesores in your yard is a good idea as well. If you are in the middle of painting or a small remodel and it’s almost complete, alert your appraiser to see if you need more time or if these items will not affect your value. Remember, you do want to live in your home and be happy there. A home which fits into the "norm" for its neighborhood can be considered typical and market accepted. As always, there is a middle ground and it is the savvy homeowner who can strike it just right.
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Your Appraisal Inspection
Many people do not know what to expect during the appraisal inspection. For this first chapter we are going to assume that the appraiser who comes to inspect your home is a qualified, competent individual and adheres to all USPAP guidelines, appraisal theories, practices and methods. It is not rare for a homeowner to be nervous and within that nervous state, distract the appraiser from their job. The appraiser knows what the bank is looking for as the appraiser is considered to be the eyes and ears for the bank. The appraiser is well trained and with years of experience and realizes that though you may tell him about the area rugs that are new or that you repainted a door that the dog scratched up, the bank does not want to read about those items nor is there a place for them in the appraisal. The appraiser should have his own method of inspecting a home which has been fine tuned over his years of experience in order for him to have the initial raw data he needs to complete the report at his office. Your appraisal inspection will start by your bank ordering the appraisal. The appraiser will then call you and set the inspection time. During your initial conversation it is always best to alert the appraiser to any special directions to your home and you can also tell him that all of your pets will be restrained, and where best to park. You can offer to have a set a plans of your home available or a past appraisal for his review as well. If there is anything special about your home, above the norm in your neighborhood, you may want to tell the appraiser as well. Your inspection time may be a range in time, say between 1:00 and 2:00 p.m. This is typical because of the travel the appraisers do and because of any unforeseen difficulties that may occur at the inspection before your inspection. Keys get lost, people forget and call on their cell to ask the appraiser to wait and so forth. An hour time frame for the appraiser to arrive is typical and a professional practice. A typical amount of time for an inspection is between fifteen and thirty minutes. It could be more if your home is large and complex, or perhaps less if your home is small and simple. The night before your appraisal you may want to sit down and write what you think is special about your home. You should write down your utility setup and any improvements, cost to you, and year made. This should also include any permitted work or unpermitted work on your home that you know about. You should also write down any market activity that you know your house has had. For instance, if you had it listed with a real estate agent within the past year, you bought it within the past three years, or if you've had it for rent or listed on a web site. You can also note any of your observations within your immediate neighborhood. Your list may look something like this: