Refinancing: Getting the Right Appraisal

Choosing the appraiser for your refinance potentially can be the same as choosing your own appraisal. What if your appraiser is grumpy, or hates two-story homes? Maybe you own three cats and the appraiser is allergic. In spite of individual biases, an appraiser should be expected to arrive within 5% of the market value of your home, or what a buyer would be willing to pay for your property.

Everyone with interest in the sale of a house wants an appraisal to be accurate. It is in no one’s best interest to purchase a home of inflated value, because that will evaporate when it comes time to sell. As the selling of homes progressively is undertaken by homeowners in place of realty agents, accurate appraisals are becoming even more important. To choose the best appraiser for you:

• Ask for Professional Certifications (usually the SRA certification).
• Be certain the appraiser knows the area market: ask!
• Ensure that he or she is a reputable professional. Did he ask to borrow subway fare, a pencil or paper? Is she appropriately groomed, on-time, and willing to discuss her training?

To be sure of your appraisal’s accuracy, you might request a second appraisal from a different source within a short period of time. An appraisal should be good for 60 days, and each value should be within 5% of the other(s).

There is an enormous difference between the way the federal and state governments calculate appraisals. State appraisal rules typically take market price into consideration. Federally-required appraisals, however, take into account the actual purchase price. This means that a state appraisal might show rapid increases within weeks, while it usually takes years to develop a significant increase in a federal appraisal. Time is in every way critical to an appraisal. Once an appraisal has been done, the short or limited report should be available within two days, and the full report within five.

Sometimes an appraisal is not high enough for a sale to go through. In these cases, a mortgage company might disclose to an appraiser the specific loan needs of the customer. Since the buyer (who typically pays for the appraisal) and the broker both have an interest in seeing a higher appraisal, the appraiser may feel pressure to oblige.

There are wide variations in almost every form of property appraisal. MSN recently conducted an evaluation of online appraisals, a service that is becoming increasingly popular for a variety of reasons. Though not yet approved by most institutions and lenders, online appraisals are utilized by many people who are testing the waters for mortgage appraisals...or are just plain curious.

The results (which were limited to only six companies) awarded the “winning” prize to the company with the best rate in comparison to on-site appraisals; it has a 50% chance of being within 5% of the real, final sale price. Some online companies do admit the difficulty of an off-site appraisal, and provide customers with a price range instead of a fixed number. In addition to convenience, online appraisals are popular because they cost less than on-site appraisals.

The backbone of a good appraisal process is sharing information. Be able to ‘show off’ your house. Make a great first impression with a clean and welcome environment. If you are selling the home, explain any work in progress and honestly disclose anything negative. Go through your house to double-check the evening before the appraiser arrives. And finally, show the same professionalism that you expect from your appraiser, in order to get the most accurate appraisal possible.