Tips for high appraisal

9 Replies

Hello everyone,

I am getting an appraisal on my house to pull some money out on a heloc. The bank is not giving me a choice in the appraisal company and I have used the one they use in the past and I always get real low appraisals. Do you have any tips on how to maximize the appraisal value without major construction. I live in a community/city of all custom homes from 200k-4 million. It’s a unique city and the comps they use typically are not comparable at all. Any tips or suggestions? 

Suggest some comps that you think are comparable to the appraiser, he may take them, but if he doesn't it probably doesn't mean he's bad at comps it just means you selected poor comps.

Originally posted by @Aaron K. :

Suggest some comps that you think are comparable to the appraiser, he may take them, but if he doesn't it probably doesn't mean he's bad at comps it just means you selected poor comps.

Thanks Aaron. I’ll try that. 

Originally posted by @Jeremy Taylor :

Hello everyone,

I am getting an appraisal on my house to pull some money out on a heloc. The bank is not giving me a choice in the appraisal company and I have used the one they use in the past and I always get real low appraisals. Do you have any tips on how to maximize the appraisal value without major construction. I live in a community/city of all custom homes from 200k-4 million. It’s a unique city and the comps they use typically are not comparable at all. Any tips or suggestions? 

Might be academic at this point, but could be useful in the future:

A few months out, start going to open houses that will be comps in the near future. Tell the listing agent you are unrepresented and are thinking of writing an offer, but don't want to waste anyone's time, so please shoot me the seller's disclosures. In the Bay Area, listing agents are pretty liberal with handing these out, especially if there's a possibility of double ending it in the agent's head.... I'm sure it'll be the same for you down in SoCal.

Great, now it's 2 months in the future, most of those comps have closed, and you know EVERYTHING wrong with them! If the appraiser knows that the seller on 123 Main St disclosed a jenky water heater and water damage in the basement, he can/will adjust for it when doing your appraisal. Hand over those disclosures detailing all flaws with your comps. 

Once upon a time appraisers made a decent income relative to living expenses and would do this sort of thorough research, but appraisal fees haven't been tracking with increased costs of living for some time, so it's currently a volume game for appraisers, not really a quality game. So, in lieu of appraisal fees going up 50% so that an Oakland appraiser can actually afford to live in Oakland without doing a zillion super quick appraisals a month, sometimes you've got to "help" them like this. 

Originally posted by @Chris Mason :
Originally posted by @Jeremy Taylor:

Hello everyone,

I am getting an appraisal on my house to pull some money out on a heloc. The bank is not giving me a choice in the appraisal company and I have used the one they use in the past and I always get real low appraisals. Do you have any tips on how to maximize the appraisal value without major construction. I live in a community/city of all custom homes from 200k-4 million. It’s a unique city and the comps they use typically are not comparable at all. Any tips or suggestions? 

Might be academic at this point, but could be useful in the future:

A few months out, start going to open houses that will be comps in the near future. Tell the listing agent you are unrepresented and are thinking of writing an offer, but don't want to waste anyone's time, so please shoot me the seller's disclosures. In the Bay Area, listing agents are pretty liberal with handing these out, especially if there's a possibility of double ending it in the agent's head.... I'm sure it'll be the same for you down in SoCal.

Great, now it's 2 months in the future, most of those comps have closed, and you know EVERYTHING wrong with them! If the appraiser knows that the seller on 123 Main St disclosed a jenky water heater and water damage in the basement, he can/will adjust for it when doing your appraisal. Hand over those disclosures detailing all flaws with your comps. 

Once upon a time appraisers made a decent income relative to living expenses and would do this sort of thorough research, but appraisal fees haven't been tracking with increased costs of living for some time, so it's currently a volume game for appraisers, not really a quality game. So, in lieu of appraisal fees going up 50% so that an Oakland appraiser can actually afford to live in Oakland without doing a zillion super quick appraisals a month, sometimes you've got to "help" them like this. 

Thanks Chris! That makes absolute sense. That also explains why my 100% remodeled from head to toe house gets appraised at the same value as a similar house that hasn’t been painted or cleaned in 40 years. I just never took into account the fee amount and I always assume people do their best  

We had the idea of presenting our own comps but being new to real estate it’s hard to know what you can and can’t do. I’m going to do all I can to help and hopefully it makes a difference. Although it’s a bit late to get the disclosures I know I can compile a list of more realistic comps than they will. Thanks again. 

@Jeremy Taylor I’ve done a few BRRRRs and learned my lesson on the first one: always prepare an appraisal packet which outlines comps, why they are good/bad and what adjustments I would recommend, as well as all info regarding the subject property. I show that all major systems (roof, furnace, etc) are less than 5 years old or brand new. I show before/after pictures showing all new flooring, kitchen, baths, etc. You want a good condition rating and don’t assume the appraiser will know that you just replaced the roof, put in new counters, etc. Tell them everything! Including the target value. Also when you apply for the refi tell the bank the target value. Sometimes appraisers see that value from the bank.
Originally posted by @Jeremy Taylor :
Originally posted by @Chris Mason:
Originally posted by @Jeremy Taylor:

Hello everyone,

I am getting an appraisal on my house to pull some money out on a heloc. The bank is not giving me a choice in the appraisal company and I have used the one they use in the past and I always get real low appraisals. Do you have any tips on how to maximize the appraisal value without major construction. I live in a community/city of all custom homes from 200k-4 million. It’s a unique city and the comps they use typically are not comparable at all. Any tips or suggestions? 

Might be academic at this point, but could be useful in the future:

A few months out, start going to open houses that will be comps in the near future. Tell the listing agent you are unrepresented and are thinking of writing an offer, but don't want to waste anyone's time, so please shoot me the seller's disclosures. In the Bay Area, listing agents are pretty liberal with handing these out, especially if there's a possibility of double ending it in the agent's head.... I'm sure it'll be the same for you down in SoCal.

Great, now it's 2 months in the future, most of those comps have closed, and you know EVERYTHING wrong with them! If the appraiser knows that the seller on 123 Main St disclosed a jenky water heater and water damage in the basement, he can/will adjust for it when doing your appraisal. Hand over those disclosures detailing all flaws with your comps. 

Once upon a time appraisers made a decent income relative to living expenses and would do this sort of thorough research, but appraisal fees haven't been tracking with increased costs of living for some time, so it's currently a volume game for appraisers, not really a quality game. So, in lieu of appraisal fees going up 50% so that an Oakland appraiser can actually afford to live in Oakland without doing a zillion super quick appraisals a month, sometimes you've got to "help" them like this. 

Thanks Chris! That makes absolute sense. That also explains why my 100% remodeled from head to toe house gets appraised at the same value as a similar house that hasn’t been painted or cleaned in 40 years. I just never took into account the fee amount and I always assume people do their best  

We had the idea of presenting our own comps but being new to real estate it’s hard to know what you can and can’t do. I’m going to do all I can to help and hopefully it makes a difference. Although it’s a bit late to get the disclosures I know I can compile a list of more realistic comps than they will. Thanks again. 

 You as a consumer can pretty much share any information you wish with an appraiser and communicate freely, short of providing incorrect information or bribing them. It's us, the lenders, that have the direct communication hand-cuffs due to shenanigans in the 2004-2007 era. 

I suspect that consumers NOT wanting to share info with appraisers, compared to real estate agents being happy to share, is a component in why many people think refinance appraisals "automatically" come in lower than purchase appraisals. The difference is that there's a professional salesperson (real estate agent) hosting the appraisal who in no small part justifies real estate values for a living (to clients, to appraisers, etc etc), versus a consumer on a refi just opening the door and saying "yup come on in, I'll be in the other room if you need me." If salespersons weren't effective at justifying higher prices and conveying value, BMW and Ford wouldn't use them to sell their cars....

That also explains why my 100% remodeled from head to toe house

The bid and/or invoice from the general contractor detailing every little thing that was done is certainly something the appraiser should be shown! Home Depot receipts, before/after pics.... share everything good about your home, and everything bad about the comps.

Originally posted by @Kyle M.:
@Jeremy Taylor

I’ve done a few BRRRRs and learned my lesson on the first one: always prepare an appraisal packet which outlines comps, why they are good/bad and what adjustments I would recommend, as well as all info regarding the subject property. I show that all major systems (roof, furnace, etc) are less than 5 years old or brand new. I show before/after pictures showing all new flooring, kitchen, baths, etc.

You want a good condition rating and don’t assume the appraiser will know that you just replaced the roof, put in new counters, etc.

Tell them everything! Including the target value.

Also when you apply for the refi tell the bank the target value. Sometimes appraisers see that value from the bank.

I learned that same lesson. That’s why I’m here now. I love the package idea. Thanks and good luck with your investments.  

@Kyle McCorkel

I love your idea of an appraisal packet. Would you mind sharing what you’ve used in the past with me? I have an appraisal coming up in a couple days and would really like to create a packet like the one you referred to above.