Getting the appraisal # you want. $$

Investor · Cambridge, MA · Member since 2013 · 264 posts · 104 votes

Hey BP,

Currently refinancing a property I bought (MA, Massachusetts), rehabbed, and rented. Now it is time to cash out refi for down payment $ on the next property.

My lender quoted me a value and has now sent out an appraiser to confirm. The appraiser works for the mortgage company so I feel good he will appraise the house to the value quoted.

Is this normally the case? Are there any small improvements I can do in a week time to get a stronger appraisal dollar amount?

Any insight on the subject would be helpful.

Thank you - Jim

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

10y

Small things you do to your property will not affect the appraisers number. What you really need is to be armed with the appropriate comps for the appraiser to get to the number you need. You will need 3 sold comps (get more in case he doesnt like your comps) that closed within the last 6 months, and that are within 1 mile of the property (or 6 blocks in cities). They need to have comparable square footage, same number of bathrooms preferably, and be in similar conditions. The appraiser will also look at 2 properties that are either currently on the market, or under contract and take I think 98% of the value on the list price to show properties in the area are still selling for that price point.

The appraisal is one of the harder parts of real estate that people overlook. Agents deal with them all the time and know how to push that appraisal price in the right direction. Often case this alone can make an agents fee worth it, because they understand the comp and valuing process a lot better than the laymen. But in your case you are just going to have to educate yourself.

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y
Small things you do to your property will not affect the appraisers number. What you really need is to be armed with the appropriate comps for the appraiser to get to the number you need. You will need 3 sold comps (get more in case he doesnt like your comps) that closed within the last 6 months, and that are within 1 mile of the property (or 6 blocks in cities). They need to have comparable square footage, same number of bathrooms preferably, and be in similar conditions. The appraiser will also look at 2 properties that are either currently on the market, or under contract and take I think 98% of the value on the list price to show properties in the area are still selling for that price point.
The appraisal is one of the harder parts of real estate that people overlook. Agents deal with them all the time and know how to push that appraisal price in the right direction. Often case this alone can make an agents fee worth it, because they understand the comp and valuing process a lot better than the laymen. But in your case you are just going to have to educate yourself.
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
10y
Unless you can get a roof or a kitchen remodel done in a week, the short answer is no. Russell's right on the money. Also be prepared for the appraisal to come back shorter than what you expect; my last house came back that way, because the appraiser (in my opinion) did not use fair comps, selecting houses in poor condition & poor neighborhoods - but he wasn't that familiar with the geographic intricacies, either. It's another reason you have to buy right, because if you plan on refinancing you need to have something to leave behind.
One thing I think you can do to positively influence the appraiser is make sure the property is spotless. You don't get extra money, but the appraiser gets a better feeling, and it's impossible to separate humans from their feelings (unless you're Spock!). One of my houses last year, the appraiser told me (I saw him as he was wrapping up) that it was the cleanest rental he had ever been inside. My tenant, who was a good tenant, nicely made sure everything was clean and even the beds were made! The appraisal came back several thousand higher than I thought it would land. Anecdotal, for sure, but what else do we have to go on?
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Billy Larkin
Appraiser · Stoughton, MA · Member since 2016 · 8 posts · 6 votes
10y
Hello, The best answer to your question is probably No there is nothing you could do in a weeks time to improve the value of your home. Let me first state I am an appraiser. The 3 main variables in regards to the appraisal are of course - location, square footage and condition. Others who have responded offer good advice. Make sure the property is presentable. That does not add value but it does help the overall image of the house in general. From what Ive heard some appraisers get insulted by the idea that you are offering them comparable properties to consider. I find that is ridiculous and I myself take any information offered to me into consideration within reason. If you are going to offer comparable sales make sure they are just that, COMPARABLE. Nothing is more frustrating than getting information of sales all 800 SF bigger than the subject or gut renovated homes versus the subjects 1980 renovation. Don't offer oversized homes from the other side of town, they will most likely wont be considered and the appraiser will see no reason to read further through the comps. Also write a list of all the improvements (major) that have recently been made to the property if in fact there have been, cosmetics aside. If you purchased a distressed home make sure that the appraiser is aware of that. Most of the information you have to offer will be available to most appraisers but it doesn't hurt to reiterate. Lastly do not push so hard that it appears you are trying to influence them, that does not go over well and if you due your due diligence and find good comparables they will speak for themselves. Both sales and active/uag homes are given consideration. There is no such thing to the notion above that the appraiser will use 98% of the sales price. The appraiser uses whatever the comps show. For example if everything is selling above listing then thats how they will give them consideration.
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Billy Larkin
Appraiser · Stoughton, MA · Member since 2016 · 8 posts · 6 votes
10y
It was also noted sales in the past 6 months. Now in fact in a perfect world, you would have three sales on the same street that sold last week all of which are comparable. You will not find that around here. The typical parameters used are in fact trying to find sale over the last 6 months but there is no reason to excuse one from as far back as a year if it is in fact a really good comp. I.E. a sale across the street, similar home that sold 11 months ago. Most appraisers in this area will start there search within a half mile over the last 6 months and then start to expand the parameters until you find appropriate comps.
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Chavonne R.
Real Estate Investor · New York , NY · Member since 2016 · 44 posts · 4 votes
10y
Hi. Can someone answer this scenario: I'm thinking of buying a short sale house for about 100K pending approval. I've seen pictures only so far from the tenants and the house is dated (but it looks mostly style wise versus anything else) It is clean and in good/livable condition. Other houses in the area are selling for around mid 300 - 400K (with 2 or 3 in the 500K). Actually one of the 500K sells were the closest property to the house and smaller in square footage. If I wanted to purchase, wait the appropriate 'seasoning' time and then refinance for line of credit, what kind of appraisal could I be looking at? Somewhere towards the fair market value of mid 300Ks without a drastic or unneeded reno?
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y
Originally posted by @Billy Larkin:

There is no such thing to the notion above that the appraiser will use 98% of the sales price. The appraiser uses whatever the comps show.
Thanks for chiming in Billy. I wish we had more appraisers on here. I go through about 2 appraisals a month, and I had been told pretty recently by an appraiser that was the case. Is it then a factor of the list to sales ratio then? I always see on the active listing comparable the line "Date of Sale/Time" as having a negative value. Could that value then be a positive number? Most of the neighborhoods where I work that go over asking are typically all cash transaction, so thus no appraisal..which is maybe why I havnt seen a positive number on that line.
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Lynn McGeein
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
10y
Definitely find your own comps and print them out and hand them to the appraiser. I did not do this last time because there were so many close to me (like 10 within 1/2 mile) that I assumed it would not be an issue as my home was priced less than those as we wanted it sold fast. The appraiser, instead, used comps on outside perimeter of our range right next to public housing, used NONE of the ones right next to mine except the widow next door who dumped it to a friend for his daughter to live in, and appraisal came in under our sale price. I wanted to kick myself as it never occurred to me he would use a neighborhood across the main highway and down another 1/2 mile, a place we wouldn't even look in when purchasing, instead of the neighborhood right next door to us with similar sq ft, bathrooms, etc. So, in the future, I will always assume they don't know the area and are trying to screw you, the seller, by picking the worst comps they can find.
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Billy Larkin
Appraiser · Stoughton, MA · Member since 2016 · 8 posts · 6 votes
10y
To try and answer a couple of your questions Russell,
Is it then a factor of the list to sales ratio then?
Yes thats exactly what I was trying to say. And that can be very different in different areas of the country and even within the same neighborhoods but in a different market segment.
I always see on the active listing comparable the line "Date of Sale/Time" as having a negative value?
More times than not this will be the case correct. We all no this industry is one of bartering so most realtors will list properties above what they think might be market value in an attempt to actually get market value. I often see strategic listings when realtors will intentionally list lower in order to create bidding wars. But generally speaking and I do mean generally, the list to sales price ratio will be a percentage of 100 and therefore yes a negative number but there is no set of 98% to be used unless that market segments list to sales price ratio is actually 98%.
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Robert Andrade
Construction Trucking Owner / Operator · New Bedford, MA · Member since 2015 · 133 posts · 37 votes
10y
@Chavonne R. I would recommend starting your own thread asking your questions. I'm sure you'll receive plenty of help that way. Good Luck! :)
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