How to Help get an accurate appraisal on your property

 4 Things That Will Dictate The Price                       Of Your Appraisal

October 23, 2015 By Tom Horn 

                                 

4 Things That Will Dictate The Price Of Your Appraisal

I often get asked what the price of an appraisal is. This is not a question that is easily answered without getting additional information. While there is a pretty standard fee for properties that are typical for an area there are various things that will dictate the price of your appraisal so we’ll look at these factors today.

Location

Location may affect the price of your appraisal if the property is in an area that has sparse sales activity. The typical example of this type of property is one that is located in a rural area. The amount of work and time necessary to complete the assignment increases because it is necessary to do more research to locate comparable sales.

Another reason that the price of an appraisal for this type of property can be higher is that the cost to the appraiser is more. Appraisers must take photos of the sales comparables and this can require driving longer distances to take the photos, which adds to the cost of the appraisal.

Size of the house (Gross Living Area)

The size of the house affects the price because a larger house takes longer to measure and is more time intensive during the property observation. I can look at a smaller house in approximately 30-45 minutes, however it has taken me 3-4 hours to completely inspect a large custom-built home.

In addition to the measurements taking longer walking through the house to note the quality and materials of construction can add to the time spent at the house. Many times these homes have additional improvements as well such as guest quarters and storage buildings to name a few.

Uniqueness of property

The word unique can describe many things, however what we are discussing here is how well your house fits into the neighborhood. If most properties have 3 or 4 bedrooms with 2 or  3 bathrooms and yours only has 1 bedroom and 1 bath then this would classify it has unique. What if your home looks like a flying saucer? You may laugh, but these homes do exist.

Log homes are another example of a property that you may not consider unique but the sale of them is. From my experience owners of log homes do not usually sell them very frequently so there are not very many comparables available. This makes it necessary to expand typical search parameters and look for sales that are further away or that have occurred further back in time. The research that these types of properties take is typically longer and more in-depth.

Who the appraisal is done for

I know this sounds strange but stay with me here. The amount of work done on an appraisal can sometimes depend on who you are doing it for. For example, most banks that I do work for require the cost approach even though the house may be 40 or 50 years old. The cost approach is really only appropriate for new construction due to the difficulty with estimating depreciation, however completing the cost approach takes additional time and effort which costs more.

In addition to completing sections of the appraisal that may not be relevant there are some forms which banks require that also take time. For these reasons I typically charge more for an appraisal done for a bank or mortgage company, however when doing a pre-listing appraisal these items are not required, and I charge less for them.

The sales comparison approach is the most relevant approach for this type of appraisal because it more closely replicates the process that most buyers will go through in choosing their new home. Buyers typically look at what other similar homes have sold for and also what other homes are currently listed and available for them to buy, so focusing only on this approach is the best method.

Conclusion

The price of an appraisal will vary based on the above criteria. The best way to get an accurate price quote would be to call an appraiser and explain what you want to use the appraisal for and to whom it will be done for. In addition, providing property specific information like what is mentioned above will help the appraiser understand more about the property and allow them to give you a more accurate quote.

Read more http://birminghamappraisalblog.com/appraisal/4-things-that-will-dictate-the-price-of-your-appraisal/

Sellers: What Every Seller Should Know About Comparable Sales

What Every Seller Should Know about Comps

RISMEDIA, Saturday, October 17, 2015— “Comps” – or recent comparable sales – give real estate practitioners and appraisers the information they need to price a home at fair-market value. Though comparable data are clear-cut to a professional, how many sellers understand the various tangibles and intangibles that inform these comparisons?

If the gap between seller perception and appraiser opinion is any indication, the answer is few. As a recent Quicken Loans Home Price Perception Index (HPPI) report http://rismedia.com/2015-10-13/homeowners-overvalued-their-homes-for-the-eighth-straight-month-in-september/ shows, homeowner estimates averaged 2 percent higher than those of appraisers – a considerable margin in markets with ballooning home values, says Quicken Loans Chief Economist Bob Walters.

“It may not seem like homeowners assuming their home’s value is 2 percent higher than appraisers’ opinions is significant, but it could make a huge difference in metro areas with higher average home values,” Walters explains.

But this broad brush stroke doesn’t paint a clear picture of every metro area. In Phoenix, for example, which this summer marked the longest streak of year-over-year gains, seller perceptions are more closely aligned with those of professionals.

“In a market that is going up, there isn’t that much of a difference with seller opinions,” says REALTOR® Steffy Hristova of Scottsdale, Ariz. “If the seller has time, the market is moving in the direction they desire. It is harder with sellers who are behind the market – the market moves, but they always think the market will be better tomorrow and it’s too early for them to sell now.”

In those instances of disconnect, the onus is on the agent to educate the seller. Hristova accomplishes this by helping sellers “visualize the data,” presented on one page if possible, and in some cases applying a simple, straightforward formula.

“I adjust the price according to the following schedule: if there are showings and no offers, 4 to 6 percent off; if there are low showings, 6 to 12 percent off; if there are drive-bys only, 12 or more percent off,” says Hristova.

Breaking down the factors that play a role can also be beneficial for the seller. Market activity generally determines the window, but comparable sales can stretch back one month to three months or more. Hristova gleans insight through resources supplied by her regional MLS and

The Cromford Report, provider of residential real estate research and analysis in the Greater Phoenix Area.

“I review statistics from the MLS daily and from available and reliable research sources, study the market dynamics in the neighborhood and in the substitute market for the object property, and review the demand and supply numbers for the zip code and neighborhood and the sales trends,” Hristova explains.

Square footage, a go-to data set for both real estate agents and appraisers, is also on Hristova’s radar. Sellers can expect their home to be evaluated against properties with similar square footage, as well as a like number of bedrooms and bathrooms. Real estate agents may take into account some of the more ambiguous features the appraiser may not consider, as well.

“I focus on the hidden gems of the object property – the ‘wow’ items, the unique design or special appeal of the property,” says Hristova. “It could be the floor plan, specific updates that are particularly attractive, landscaping features, undergrounding wiring, etc. I also analyze potential negatives – types of financing available, location within the neighborhood, proximity to noise, etc.”

And because no two sellers are alike, individual circumstances also warrant consideration. “Will they wait? Will they provide easy access? Will they be willing to repair items?” Hristova asks.

These and other facets, like age, location, lot size, workmanship and energy-efficiency, can all serve as means for comparison. Age, in particular, can be a key variable, because it can indicate the condition (or decrepitude) of the home. According to Trulia, comparables for age are typically pulled within a five-year range.

For sellers, bear in mind comparable data reflect the activities of both buyers and sellers, no matter which the market currently favors. And as Warren Buffett so eloquently sums up:



This post was originally published on RISMedia's blog, Housecall. Check the blog daily for winning real estate tips and trends for you and your clients.hatShou

BUYERS: 5 Questions to Ask Yourself Before Getting an Appraisal

5 questions you must ask yourself before getting an appraisal

October 25, 2013 By Tom Horn  Birmingham Appraisal blog

I had a reader email me a question last week asking why they should get an appraisal on their home, and I want to share with you the answer I gave them with the hope that it can help you make a similar decision. This person asked me “Why do I need to get an appraisal, I don’t want to have to pay for one”? In their particular situation a family member had died and left a home to the family. They wanted to sell it and needed to know what to ask. Some situations require you to get an appraisal such as when you buy or refinance a home, and you usually do not have a say so in the decision, however there are other times when you can make the decision yourself.

I told the person to ask themselves these 5 questions to help them.

1. Do I have access to a recent appraisal? The owner may have had a recent appraisal done on the home that could be used, such as with a refinance or a recent purchase. A recent appraisal can give you a good estimate of value if the real estate market hasn’t changed much since it was done, and if this is the case I wouldn’t recommend getting a new one.
2. Can I get information on home sales in my neighborhood, and if so are the homes very similar to my house? Some neighborhoods are what we call cookie cutters, meaning that they are all very similar in age, style, size, and appeal. If this is the case, and there have been recent sales and some current listings, then you may be able to estimate the value on you own. You can read more about doing this on a past post I wrote.
3. If I get an appraisal will the cost be offset by the money saved? I recently did an appraisal on a home a person was buying. They were not getting a loan from a bank so they did not have to get the appraisal, however they wanted to know if they were paying the right price. The appraisal value came in approximately $15,000 lower than the contract amount! The cost of an appraisal varies across the country, but in the Birmingham, Alabama area the average is about $350-$450 for a typical house. Would you pay this to save $15,000?
4. If I don’t get an appraisal will it prevent me from selling my home in a reasonable amount of time? This is related to #3 because it compares the additional cost you may have to pay if you don’t get an appraisal. By asking yourself this question you take into consideration the cost of holding on to the house for an extended period of time. If you price your home too high, and it takes 4 months longer to sell than if you had priced it more competitively with the market, then this additional cost must be weighed against the cost of the appraisal. If your mortgage payment is $1,000 then this additional cost would be $4,000, which would be about 10 times the cost of the  appraisal we discussed previously. You need to determine if this is a good return on your investment.
5. Am I committed to actually using the appraisal? Some people get an appraisal but will not use the value estimate to set a list price because they don’t like the value. Sounds crazy, huh? Why pay for an appraisal if you’re not going to use it? People allow their emotions to take over and ignore the value arrived at by a professional and unbiased appraiser. The appraiser is trained to be unbiased and provide a report that reflects the local market. If used correctly the appraisal will help you price your home to the market so it sells in a reasonable amount of time for the what the market will support.

If you have read through these five questions and decided that an appraisal can help you sell your home, please give me a call. I can answer any other questions you may have-no strings attached. I am committed to helping homeowners sell their home by pricing it properly and look forward to speaking with you.

Read more http://birminghamappraisalblog.com/appraisal/5-questions-you-must-ask-yourself-before-getting-an-appraisal/