Misunderstood.
I am frequently asked “What are the most common issues that you find with appraisals?”
First let me clear up one major misconception. Neither your realtor nor your loan officer/lender has any control over who the appraiser will be for the property you are purchasing, or what will appear in the appraisal including value, condition, needed repairs, and observations. According to regulation, the appraiser must be a neutral 3rd party and no influence is to be applied by the lender.
And second: An appraisal is an opinion. Granted, it requires a strict process and is an educated opinion. Nonetheless it’s entirely possible that one appraiser’s conclusion can differ from another’s. Having said that, it is my experience that most appraisals are very much in the ball park. Not insignificant here is the word “most”. I have, on rare occasion, run into an appraisal that’s just gone jaw-droppingly awry. (my spell check tells me that jaw-droppingly is not a word however appropriate)
Appraisals cover much more than just value. The state of the current real estate market is included. Location, neighborhood, surrounding properties and their influence on the subject are all taken into consideration. A property’s condition is heavily assessed and often, needed repairs are sited. If you are financing the home, this list of repairs is crucial. Required repairs will need to be addressed and occasionally, casual concerns will be examined by mortgage Underwriters.
So here’s what started this whole thing. What are the most common issues we see in appraisals?
- Water and electricity being shut off. A frequent problem in bank-owned properties. It can not be confirmed that plumbing, electrical, heating and cooling systems are in working order.
- In homes serviced by gas, pilot lights need to be lit.
- Pools must be filled and functioning. Also usually a complication with bank-owned homes.
- Evidence of wood destroying insects.
- Missing roof shingles, tiles, or flashing. Signs of roof leaks.
- Inadequate grading and drainage around foundation.
- No access to attic.
- Lead based paint. Homes prior to 1978 can not have peeling paint.
- Exposed electrical wiring.
You might consider discussing these or other issues revealed in the home inspection, with your realtor and lender prior to ordering the appraisal.
If you have additional concerns about the mortgage process, please don’t hesitate to ask. There’s never an obligation, only information.
