Depending on the situation, a full interior appraisal of a property is not always necessary. Some refinance loans or low-risk loans may only require a “drive-by” or “exterior only” appraisal to be completed. This is also a common inspection request for foreclosure proceedings.
An exterior appraisal relies on data gathered from observations of the exterior of the property (typically viewed from the street), along with information obtained through public records (zoning information, tax records, assessor cards, and other public data). Neighborhood characteristics and comparable sale data are also utilized as in all other reports.
On the homeowner’s end, exterior appraisals can be seen as more convenient since they don’t require an appointment time. This often can help move the process along faster as the appraiser can go at their first available time.
However, there are limitations and it is not unheard of for a homeowner to request a full interior inspection following an exterior only because the information that was publicly available to the appraiser was not fully reflective of updates/improvements made to the home and therefore, could change the estimated value.
Since the appraiser is relying only on what they can see from the outside of the home and what is reflected on public records in regards to gross living area, updated features and permits pulled, assumptions often need to be made about the condition and features of the interior of the house. This may result in a value that is lower or higher than what would have been estimated if the appraiser had access to the interior of the property.
One of the common things a homeowner looks at when trying to figure out their home value is what the house next door sold for, or what Zillow reports. While these methods are not completely off, depending on the situation they are not a reliable way to determine your current home value.
First, let’s talk about Zillow. Appraisers do not consider the values estimated here to be reliable because it lacks the ability to take into consideration information gleaned from a physical appraisal. Renovations, wear and tear, unique property features and upgrades can’t be assessed accurately via an algorithm. Zillow’s algorithms rely on generalized data points and market trends, which means it may not accurately depict the market of a particular local area or marketability of a particular type of property.
Bottom line, Zillow may be able to give you a very rough, ballpark style estimate of what your home is worth, but it is not 100% accurate and could swing much higher or lower, depending on the circumstances.
Looking at what the house next door sold for seems like the next best place to get an estimate, and a lot of the time it’s not a bad idea! If it’s next door you share a similar location and neighborhood market which is a good start. But there are other aspects to consider.
Appraisers use comparable sales that are similar to your home in varying ways:
The house next door may end up being very similar to your own, and therefore a good comparable sale. However, if it has drastic differences in some of the areas listed above, it may not be viewed as a truly comparable sale.
This week we celebrate the 249th anniversary of the signing of the Declaration of Independence! We wish you all a happy and safe 4th of July. When an appraiser makes a valuation of a property, one of the most important pieces of information is the effective date. While this date is often current (usually the same as the date the inspection actually took place), there are times when it is necessary to use a prior or future date to get an accurate analysis for the situation requiring the appraisal. Although the inspection date won’t change, appraisers can value a property based on a date in the past using prior market data and only utilizing the improvements (or generally, the condition of the property, whether that was improved or requiring work) up to that point in time. Reasons for this can vary:
To determine the condition of a property during that time, the appraiser will utilize homeowner-supplied information if possible, old MLS listing photos/data if applicable, town records like permits filed/closed, and even Google satellite data! The appraiser will then use comparable closed sales that occurred in the appropriate time range to determine the reasonable estimate of value. A prospective appraisal is a valuation completed as of a future date. This is typically done when the property’s value is contingent upon work to be completed (construction, major repairs). The appraiser will analyze the proposed work to be completed and utilize the hypothetical condition of completion to estimate a value. The use of assumptions is typically unavoidable, like assuming the likeliness of the work being completed successfully or potential market changes. The appraiser has to take all of this into consideration when making adjustments. Keep in mind that the “report date” or “date of appraisal” is not the same as the “effective date.” The report date is the specific day the appraiser actually viewed the property, and the effective date is the reflective of the actual date that value was applicable to the property.
An appraisal provides an objective assessment of a property’s market value. For buyers, this ensures they are not overpaying on the property. For sellers, it helps establish the fair market value of their home and gives the opportunity for effective negotiations.
Appraisal waivers are often used to make a competitive offer when trying to purchase a home, especially during times when the competition for homes is fierce due to low inventory and high demand. But before a prospective home buyer decides to waive their right to a home appraisal (and even before a seller decides to list a property!) there are some things to consider:
The CT real estate market continues to be busy! With so much action happening, you may find yourself selling or purchasing a home. Buying or selling a house requires a few steps, often including having a real estate appraisal completed.
Many people wonder if the appraiser reviews the purchase contract and the answer is yes!
USPAP (Uniform Standard of Professional Appraisal Practice) requires appraisers to analyze all agreements of the sale, and per Fannie Mae guidelines “the lender must provide the appraiser with a copy of the complete, ratified contract.”
Standard appraisal forms also require appraisers to enter the purchase price, date of sale, and any specific terms/conditions of the sale (seller concessions, repairs prior to closing, or anything unusual that might impact the appraisal), as well as confirm that the contract was analyzed.
The summer is here and for many of us that means we’re headed to the backyard pool!
Many homeowners wonder how their pool effects the valuation of their home. Does it add to the value? Does it hurt? Can it be included at all in the consideration?
The short answer to these questions is yes, swimming pools can add value to a home. But there are factors that determine to what extent, if at all. Generally speaking, inground pools are more likely to be valued vs. above ground pools (this is because above ground pools are considered temporary and removable structures). When determining what value, if any, an inground pool adds to a home’s value, the appraiser looks at many factors including:
After consideration, the appraiser will determine what value the pool adds to your home. Keep in mind that buyers are going to have varying opinions on the appeal of a pool. Some may be actively looking for a home with one, and others may be more hesitant due to factors such as maintenance costs, liability, and personal interest.
If you have a pool, remember to practice water and pool area safety guidelines! Enjoy the warm weather we’ve got headed our way!
After receiving the request from the lender, the appraiser must analyze the relevance of the information provided with the ROV. Regardless of whether the ROV request results in a change in value or not, a revised appraisal must be provided within the defined time frame with a description of the points in dispute and the outcome.
A residential real estate appraisal is a detailed evaluation of a property's value, usually conducted by a certified appraiser. This is typically done to determine the market value of a home for mortgage purposes.
On the other hand, a residential property inspection is a thorough examination of the physical condition of a property, including its structure, systems, and overall safety. It is usually performed by a certified home inspector before a home is sold.
While an appraisal focuses on the monetary value of a property, an inspection focuses on identifying any potential issues or concerns with the property. Appraisals are required by lenders for mortgage approvals, while inspections are recommended for buyers to make informed decisions about the condition of the home.