When you’re selling your property, it is very likely that you will encounter the appraisal process. Refinancing often even requires appraisal, and some property owners consider ordering appraisals just to get an idea of the value of their real estate.
If you’re involved in a transaction with a bank, you will most likely have to go through an appraisal. The buyer will generally pay for the appraisal (unless it’s a refinance) and it will usually be ordered by the bank. The appraiser will do an inspection of the property and then produce an appraisal that will be sent to the lender.
How long does it take? The inspection by the appraiser usually will take 20 to 30 minutes. The primary purpose of an appraisal is to take some general measurements and verify the overall condition of the property. It is very common for the final results to take up to a week before they are delivered by the appraiser, after the appraisal inspection is done. Be careful not to confuse the appraisal inspection with the normal inspection, which usually (but not always) takes place prior to the appraisal.
Can I (we) influence the appraisal? Legally we cannot. There are some pretty strict rules that got tightened even further during the market dip that took place in the mid 2000’s. We can provide additional information to appraisers so they can make a good judgement.
How accurate are appraisals? This is a difficult question. Like with any profession, some appraisers are more experienced than others. The area where they are from matters as well, see the next paragraph. Ultimately it is an opinion of value. Even though most appraisers use a uniform method of evaluating property, at some point they have to use judgment as to what they will compare the subject to and how much to allocate towards adjustments. Pricing is an art, not a science.
How is the appraiser chosen? If your doing an appraisal for yourself, you can select any appraiser and pay them for their services. Good Realtors commonly know of accurate and knowledgeable appraisers in the area. When a buyer is getting a loan, the bank will order the appraisal and the consumers generally won’t have a say in who is selected. Banks will often use third party services that provide pools of appraisers that are randomly selected to try and ensure a true arm’s length analysis.
Bottom line: whether you are a buyer who is having an appraisal done through your lender or you are a seller who is having an appraisal done on your home from a buyers lender; there’s a couple of things to keep in mind.
There isn’t much you can do about the outcome of the appraisal, so it’s best to allow it to happen.
Most appraisals are reasonably accurate.
If there is an issue with the appraisal, then often it can be overcome by a skilled negotiator.
If the appraisal is grossly inaccurate or contains erroneous information, it can be disputed and rectified in extreme circumstances.
At Perry Real Estate Solutions we are well versed in navigating the appraisal process. We are excellent at negotiating not only issues that arise, but initial terms that can circumvent issues all together. If you have anymore questions, please don’t hesitate to give us a call.