Often times the appraisal can make or break the deal. Both in terms of qualifying, but also getting the best rate with the lowest fees. The less equity you have the more likely it is that the rate and/or fees will be higher or worse you no longer qualify. The rate you get on your mortgage is worth so much over time, and the fees can easily fluctuate thousands of dollars depending on this exact appraised value. Being prepared for the appraisal inspection is well worth a little time and sweat.
And here’s the key thing to remember: an appraisal is one person’s opinion of value. It will inevitably have an element of subjectivity involved because the appraiser is human and will choose both the comparable homes and the relative adjustments, which is how your value is determined. Some appraisers are more open to talking with you and being open to working with you than others but it is always worth the effort and you won’t know unless you try.
Refinance Tips: How to Get the Most Value from your Home Appraisal
- “Showcase” your home in the best light. This means tidying up and making your home look good! Think of it as you are having an important friend or family member coming to visit. A quick 30 minutes of cleaning and organizing can give a positive 1st impression that will impact how the appraiser looks at your home.
- Be home to personally show your home to the appraiser and be friendly. If you can establish a little rapport they might work to give your property a little love when it comes to the valuation. Some appraisers will be more open to a “guided tour” than others, but they should listen and give consideration to what you show them as long as it’s relevant.
- Point out the distinguishing characteristics of your home, especially related to similar homes in your neighborhood. Examples include, an extra bedroom, landscaping, new flooring or even the view and proximity to a busy street are. These are all things that can effect a property’s value.
- Show them any work you have completed in your home since you bought it. Remodeling, upgrades, new appliances, landscaping, anything you have done that might increase the value of your home should be mentioned as well as the amount of money spent on the project. If you have receipts or an invoice from the contractor, offer to show the appraiser.
- Provide some nearby, recent sale comparables that are in the value range you are looking for. You can print these from online websites such as Zillow or Trulia. The properties the appraiser selects as comparables is the single biggest factor in how they determine value. You might want to check with your loan officer or mortgage broker regarding these comparables to make sure you are picking the right ones to help your case. The appraiser may or may not use them, but it’s always worth a shot.
- And lastly, but certainly not least is a quick mention to the appraiser what value you need in order to make your refinance work. You can get this information from your loan officer or mortgage broker. You can simply say politely to the appraiser “Do you think we can get ____ value? I’ve been told this is the number we need to make this refinance work.” You want to be careful about treading lightly here, but if the value is close many appraisers will try to make it work.
An important Note and consideration on these recommendations: I am not condoning, nor suggesting that anyone put pressure or direct influence on an appraiser. The independence and autonomy of the home appraiser is a very important part of the mortgage industry and underwriting process. Appraisal influence by mortgage sales professionals and mortgage companies was absolutely part of the problem in years past that led to and fueled the mortgage meltdown and real estate bust from 2007-2011.
These tips are simply about informing the appraiser and showing your home in the best light.
The Home Valuation Code of Conduct, or HVCC, that went into effect in recent years has been a double edge sword. The HVCC prohibits lenders and mortgage professionals from having direct contact with appraisers. It also allows them to be very conservative or “low-ball” the value without much in the way of recourse or accountability. The appraisal management companies decide which appraisers they hire or contract to and they are also supposed to be independent from mortgage lenders and banks.
About the Author – Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising the industry standards for integrity and transparency.
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