Appraisal Input Suggestions

5 Replies

Hey BP Nation. We have been doing a live in flip over the past two years. We have done many upgrades to the house, and most comps in the neighborhood are not updated (they still have old school interior). As we get ready to sell the house soon, how can we assist the appraiser with our input so that the appraisal can be more favorable for us?

Thanks.

Pull the existing comps based on similar size and age. This will give you a base to start at. Expand your search farther out until you find comps that are similar to your property. 

Thank you for the reply @Ben Sears ! All of those sold comps that are showing properties with same size and age, are not updated (they still have the interior from the late 80's), which is why I am having a hard time to find comps that support my asking price. We are under contract for what we asked, so clearly, the market is willing to pay for it. But how do I convince an appraiser, in case he will give us a low appraisal?

I will send him the executed documents for the contract.

I am preparing a list with the upgrades that we have done. Should I attach photos to that list, or would it be enough that the appraiser sees the upgrades in person when walking the house?

Hi @Naeem Kapasi - unfortunately, as @Russell Brazil has already alluded to, you're stuck dealing with the dated comps - especially if they closed recently and are close in proximity.  While I'm sure this will vary from appraiser to appraiser, I've noticed in my markets that appraisers seem to be more willing to use older comps before they'll extend the radius of their search.

I've been in your position before (numerous times) and here's the approach we took (sometimes it worked and sometimes it didn't - just depended on that specific appraiser):

  • If you had multiple offers on the property, make sure the appraiser is made aware. Even if they didn't come in as formal written offers, if a large number of people were asking for disclosure packets or discussing price, play this up. A single offer at your asking price isn't nearly as convincing that the "market is willing to pay" as compared to 6 or 8 or 10 offers/interested parties.
  • Definitely create a list of your upgrades along with the cost (assuming the cost is high enough to bridge the gap between the dated comps and your sale price) - photos don't really matter.  Part of the appraisal includes categorizing the "condition" of the subject property and the comps, and there's a corresponding price adjustment that will be made if the two properties are in different categories.  If the appraiser sees a big dollar amount for your list, they might increase the price adjustment to be more in your favor.
  • The appraiser won't walk through any of the comps - they'll look at the MLS photos, the MLS description and do a drive-by. If you or your agent walked through any of the comps and are able to paint an uglier picture of the condition of those properties than their photos and description do, you need to let the appraiser know. For example, if you were told a place needed $50k in foundation work but it wasn't mentioned in the MLS write-up, you're going to want the appraiser to know.

As a listing agent in this situation, we'd be trying to do as much of the appraiser's job for them as we can ... we'd provide them with the 3 to 6 comps that we believe are best - we'd highlight our upgrade list - we'd highlight the faults of each comp (especially if it wasn't obvious from the MLS entry) - we'd focus on the number of offers we received and how quickly they came in ... and we'd deliver all of this as a print-out that we'd hand them as we let them into the property to complete their appraisal.

Good luck!

Thank you @Brian Sparr for the input! I just read your message, but yes, we ended up doing all of what you mentioned. I actually gave the appraiser one comp that was favorable for us, but across a major street that divides two neighborhoods. It ended working for us as the value we got was $2k below the offer price (so we had to adjust the price down $2k according to the appraisal). We ended up getting more than what we were anticipating before putting the house on the market, so we are happy with that. 

Thank you so much for all of your input, truly appreciate it!