Ask an appraiser almost anything (comment below)

If you have a question for a real estate appraiser, here’s your chance to ask it. You can ask me almost anything below and I’ll respond to your comment. Have you always wondered about how appraisers do their job? Do you need some insight for a situation you’re dealing with? Is there something that you’ve been curious about or maybe something that is bothering you? Or do you have a business-related or blogging question? Feel free to comment anonymously or use your real name. I do hope some fun random questions show up too. Let’s talk.

ask an appraiser a question - sacramento appraisal blog

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Comments

  1. Anne Graviet, REALTOR, CHS, C-REPS says

    Would you rather appraise 1 house-sized duck or 100 duck-sized houses?

    And, on a more serious educational note, I wonder what would you do with an FHA appraisal and your Subject has a driveway like this one? http://imgur.com/HHl8xeT

    • says

      I think I’d pass on the ducks altogether. πŸ™‚ I love the visual you provided for the question. Nice job. If there was a tripping hazard, I would call for the driveway to be repaired. This looks fairly minor from what I can tell, so I probably wouldn’t call for any repairs. Thanks so much Anne.

  2. Doug says

    Hey Ryan,
    Love your blog! I’m wondering how do you factor in the value of historic architecture in some of Sacramento’s older neighborhoods? For instance there is a home at 3846 T st in Elmhurst that isn’t selling because they crammed 2 new Natomas style McMansions into an area they obviously don’t ‘belong’.

    Also, do you have a tool to chart sale price in relation to the year a home was built? For instance comparing homes built in the 1920s vs the 1950s, etc (accounting for differences in sqft of course).

    • says

      Thanks Doug. It’s always interesting to see new homes in older areas. There are quite a few newly constructed homes in East Sacramento, Land Park and other well-established areas. It seems the market is very particular about wanting era elements for these properties, so builders really need to take design into consideration by incorporating a similar look to the newer homes. Granted, these houses will probably be larger than other homes around, but if they are to sell at the top of the market or at least compete with others nearby, they should definitely have some “old world” charm. When a house does look profoundly out-of-place in terms of architecture, it can have a bad effect on price. Also, when the wrong location is chosen, that can be an issue too. That house you mentioned definitely priced higher than any recent sales (as you can see from the Elmhurst graph in this post: http://sacramentoappraisalblog.com/2013/07/25/highlighting-some-market-trends-in-sacramento/).

      I don’t have any chart like that. I tend to compare homes in the 1920s with homes in the 1920s or so. Usually when there is a difference of thirty years, it might be a separate housing tract (which sometimes isn’t a great comparison). I suppose a spreadsheet could be set up though to track prices by age and year built. That doesn’t sound too complex.

  3. says

    I’m going to ask you a few questions – one related to business and one to your blog. Because my background is in marketing and dealing with our buyers and sellers on a personal level, I may not be as detailed and specific as Steve O might be …

    Okay, since it’s Halloween, I am going to get a bit more “dark” on my inquiry. Have you ever appraised a house has been described as haunted and/or haunted by a sad story and/or had some unique history that may have been hard to appraise? I know you have for certain with your experience, but do you have a good stories to share. I know some situations might get emotional, and I imagine that’s really hard with your job, particularly if there’s been a death on the property or a sad tale.

    Second question, I know Steve O and I base our video blogs on questions were being asked frequently – What’s your tip to staying regular with your posts and staying relevant? Do you blog on inspiration solely or do you do a bunch of blogs and release the posts over time? I know you’re busy with work and community, and you have a young family, but it’s so impressive how you stay committed to your blog. You have one of the best blogs in the area. Thanks Ryan always for sharing your wisdom.

    • says

      Thanks Heather. Great questions.

      1) Halloween: I’ve never appraised a so-called “haunted” house. I did appraise a suicide house though recently and that was sad. I felt bad for the family. It was also equally disturbing to see the aftermath of the suicide too in terms of missing carpet and holes in the wall from a bullet. Regarding haunted, for any onlookers, there was a great piece in the LA Times recently about an appraiser who specializes in problem properties. http://www.latimes.com/business/la-fi-c1-vegas-satan-20131008-dto,0,3242326.htmlstory#axzz2iZGtNa1T

      2) Blog Stuff: First off, you guys do an incredible job staying in touch with clients. I learn a ton from you and I sincerely love your videos, posts and Facebook & Twitter presence. I think it’s most important to keep a ton of fresh post ideas in front of me. That’s how I am able to post regularly. Otherwise I wouldn’t like the pressure of sitting down and trying to come up with an idea on the spot. I use the following sheet to help me keep sometimes dozens of ideas in front of me. It hangs above my desk every day so that I can map out my posts for the week. http://sacramentoappraisalblog.com/2012/02/07/how-to-develop-original-blog-content/ I wish I had 10 posts saved as drafts, but that’s just not how it works for me. On occasion I might have a couple or even a week’s worth of drafts if I’m lucky, but most of the time I write something the day before and then end up posting it the next day. It does take time, but I view it as a commitment, so it is something I simply find the time to do – even when it feels like I have no time. I do also have file folders on my desktop with “things I’ve seen recently” and “neighborhood market trends” so that I can pull from those regularly. This means when I see something that might work for a blog post, I drop it in that file and then use it later.

      • says

        Wow, that was a crazy article and what a niche that guy has … takes a special personality to become an expert in that niche.

        Thanks for your feedback on how you belt out all the spectacular posts and keep it all so fresh and relevant. I know it’s a job in itself to keep this all going and be consistent. Great work Ryan and thanks for the detailed response and links.

    • says

      Great question Sharene. Thanks for asking. Personally I see wallpaper and other outdated elements tend to be lumped together as part of the total package of the house. For instance, if there is wallpaper, there is probably also popcorn texture, older fixtures and maybe even an original kitchen (and green shag carpet if we’re lucky). πŸ™‚ I don’t usually isolate just one factor like wallpaper because there are usually multiple factors to consider along with the wallpaper. Ultimately this can definitely have a big impact on value because the house has to be compared with other similar non-renovated homes. I tend to look at the market and see a tier of values with upgraded properties as the top of the market, fixers as the bottom and then usually outdated ones somewhere in between. There could be a substantial difference in value between renovated homes (including flips) and a cosmetic fixer (needs updates). It really depends on the neighborhood, but the difference can be easily 10-20%+. It also depends on the market. When competition is fierce, buyers are more forgiving, but as inventory increases, the value difference can become more significant.

  4. Michael Faulk says

    Ryan, I am re-financing an investment property in my area that I just bought about a month ago. This property is at the beginning stages of renovations. The lender ordered an appraisal and requests that I document any improvements w/ costs I’ve done thus far. Also, the lender is requesting that I list any improvements that I will be making before the rehab is completed. Do you have any recommendations or best bets regarding this whole process? The main thing that sticks out in my mind is to be completely honest with my “to do list”. Is this type of appraisal called a “subject to”? Any “best bets” from an appraiser would be awesome! Also, who checks to see if the renovations were done correctly? I just want to make sure all my I’s are dotted and T’s crossed. Sorry for responding to the thread so late…

    • says

      Michael, thanks for checking in. I’m really glad you did so because I am always hoping people ask questions. This post wasn’t just good for the week it went live, so thanks for starting the trend again. πŸ™‚

      First off, you’ll want to ask your lender what type of appraisal is taking place. It sounds like it is likely an “after repair value” appraisal because the appraiser would otherwise not need a list of repairs that will be made. Some would also call this type of an appraisal “subject to” since the value is subject to the repairs being made (This might be more than you want to know, but I wrote a bit more about it here: http://sacramentoappraisalblog.com/2013/11/05/there-is-more-than-one-way-to-skin-an-appraisal/). It’s common for me to do these types of appraisals for investors – often with hard money loans. Usually the lender does not want me to verify that repairs were made, but that could always be requested depending on the lender. Sometimes they want a sense of the “as is” current value as well as the after-repair value. I’m not sure what you mean by “best bets”. Can you unpack that a bit more? No matter what you do, definitely be honest about your repairs and realistic about the quality of your workmanship (as well as how much value your repairs will really add). Sometimes if I’ve never done work with an investor I will ask to see photos of the quality of work they do or plan to do at least so I can get an idea for the finished product. After all, “remodeled kitchen” or “upgraded bathrooms” can mean a whole lot of things depending on who’s doing the talking. When you meet the appraiser, be sure you have a detailed list. If you are changing something about walls or making an addition too, it always helps to have plans. The last Realtor / Investor I spoke to in this situation really explained the repairs in detail, but also helped explain how some of the structure of the house was actually going to be changed to make the house more competitive in the neighborhood it was in (it was a bit of an odd layout in the first place).

      • Michael Faulk says

        Ryan- Thanks so much for the detailed response. I honestly really appreciate your input. I have read your blog over the past few months and listened to you on the Bigger Pockets Podcast. You give so much great information and you have helped me understand from the side of an appraiser. Thank you for being so open!

        And when I mentioned “best bets” I just meant pointers from your side that could help investors. It never crossed my mind about having available the before/after photos if an appraiser asked. I could see how an appraiser would want verification about workmanship. You really gave a ton of great information I can use as a new buy/hold investor πŸ™‚

        I will definitely be continuing to follow your blog! Thank you from all the way in Bossier City, Louisiana.

        • says

          That’s so great. I love BiggerPockets, and I’m so glad you listened to the podcast. Thank you for reading the blog too. That makes my day to hear. I’ll have to Google Bossier City so I have some more context where you are. πŸ™‚

          I think it’s great to have before and after photos available, but during the “subject to” appraisal just make sure the appraiser understands the type of quality you’ll be putting together. That’s where photos become valuable for me at least if I do not already know what the investor does. Photos can be provided of previous flips maybe or at least photos of the type of cabinets, flooring, windows, etc… that will be used. That’s definitely going the extra mile, and most of the time that doesn’t happen, but just make sure to somehow communicate an itemized list of forthcoming updates and any glimpse into quality where possible (for instance, there is a big difference if cabinets are custom made or come from IKEA). When you come around to selling the house (I’m assuming your flipping it), here are two articles to check out so you are ready for the buyer’s appraiser on that end of the deal: http://sacramentoappraisalblog.com/2013/04/22/what-type-of-information-should-you-give-to-the-appraiser-during-an-inspection/ and http://sacramentoappraisalblog.com/2013/05/13/6-ways-to-have-a-more-valuable-exchange-with-appraisers-during-the-inspection/

          Take care. I hope all goes well.

  5. Monica Gonsalves says

    Hi Ryan – Love the blog and the info that you give. It’s awesome! The different pictures are great too.

    Question for you, we own a house that sits on 1/3 acre lot that backs a creek in Citrus Heights. The city is proposing putting a paved bike trail along our property line next to the creek. The bike trail will be 12 feet paved with 2 feet in shoulder on either side with no walls installed other than our wooden fence. Would this be external obsolescence and negatively effect the value of our property? Just wondering. Thanks for your expertise on this matter.

    Monica

    • says

      Hi Monica. Thank you for the question and for your kind words. It’s honestly hard to say because there are many factors to consider. If the bike path sits below your property, that is definitely a plus for you because then nobody can peer into your yard without much effort. If the bike path was a nice feature and helped contribute to a sense of community in the area, it could be an asset. On the other hand if it became a hotbed for loitering and noise, it could be a negative. I think part of it depends on if any of your view is impacted. If you simply have a wooden fence with no real view, it’s hard to think the bike path will even be noticeable. The question is simple, but honestly the answer would take quite a bit of digging and research to uncover the answer.

  6. Steve Nelson says

    Hi Ryan,

    I stumbled across your blog while trying to research the potential valuation effect of a new luxury hotel being built in a neighbourhood (oceanfront) that has, up to this point, been a sleepy area (albeit with huge oceanfront homes high above the sea) about a mile drive away from any retail. Still in development and still a number of empty lots.

    Should I assume that by virtue of the new amenities in the neighbourhood (literally within 4 or 5 blocks) and increased traffic that if anything there should be a slight uptick?

    I appreciate any general input you might have.

    Thanks!

    Steve

    • says

      Steve, thanks so much for checking in. As much as I’d love to comment on that, it’s impossible to say without knowing the details of the project and location. I have no idea about your local market, so it would really only be a guess on my part. Hopefully the new luxury hotel and amenities will be an asset for the surrounding area.

  7. Greg says

    Im in the process of getting a fha home loan. The property I am buying has a 30’x60′ metal building on it. Is the metal building considered in the appraisal?

    • says

      Hi Greg. That is a great question. Thank you for asking. The appraiser will need to consider whatever is at the property and how it might contribute to value. Of course anything that is not permanently attached is considered personal property (and therefore wouldn’t contribute to the value), but in this case it sounds like this is going to be something that likely contributes to the value. Does that make sense?

  8. Eve says

    Hi, this is a great blog and I hope you can help with my question! I don’t live in the Sacramento area, but I do own a Victorian home in KY that is probably similar to a lot of houses out there.

    I would like to refinance my loan which of course requires an appraisal. My house is a fixer-upper and in one of the rooms I pulled down the dangerously sagging plaster ceiling. I’ve decided not to put up a new ceiling and instead stain the current cross-beams and leave it all open. This of course allows for the bottom of the old floor boards above to be visible as well as the knob and tube wiring. Would an appraiser see this as suitable and character-enhancing? Or would they require me to put up a typical dry-wall ceiling?

    Thanks in advance for your advice! πŸ™‚

    • says

      Hi Eve. Thanks for reaching out. That’s an interesting situation. It’s honestly difficult to visualize what it would look like. Ultimately I am concerned about exposed wiring. Might that be a safety issue? Lenders often want appraisers to call out any safety items in the appraisal report, which means the safety issues will be required to be cured. The idea of stain sounds really nice as I’m a big fan of wood, but I hesitate to think exposed wiring will promote safety – and that can be a big deal. You can email me a photo of course if you’d like for me to consider exactly what it looks like. I might also recommend asking your loan officer what he/she thinks about the issue since the loan officer can potentially give you some perspective from the lender’s side of things prior to the appraiser coming out. Best wishes.

      • Eve says

        Ryan,

        Thanks for the response! I don’t know how to upload a picture to show you, so I found a website that has similar pics. If you scroll down toward the bottom of this site, you’ll see pics of exposed ceiling beams that are extremely similar to mine. It looks like they have exposed wiring that is tucked up in the corner of the beams. Perhaps this would be suitable for an appraiser to approve..?

        http://www.oldtownhome.com/2012/4/19/Open-Housing-A-Night-at-the-Theater-in-this-Grand-Home/

        • says

          Hi Eve. Thanks for the link. I love ceilings like that. I think I would defer to local code on the issue. If local code is okay with wiring like that, I wouldn’t and couldn’t argue against it. It all comes down to this not being a safety issue, and if the ceilings and electrical were done to local code standards, you should be good.

          Best wishes. πŸ™‚

  9. Sean says

    Hey there!
    Sorry this is so long… Here’s my question: Once you have determined the adjusted values of the comps, how do you come to a final decision? Is there a place in the report that should talk about weighing the comps or even describing how the final price was set? Here’s my situation:
    I’m getting a cash-out refi… and I recently tried to contact my appraiser asking him questions about my appraisal. He wrote my lender and told them I was harassing him! (For calling him and leaving a message to “call me back at your earliest convenience” twice in 2 days… are you serious!?)
    Anyways, I was confused that my home appraised for lower than homes in my neighborhood, because I have more equitable items in my home when comparing to the comps. In fact, I agree with his comps, and his adjustments… however, when you consider the adjusted price of all the comps, the average comes out to 342k. (Which is what I initially thought the home would fetch before the appraisal!) However, his final decision was 333k. Which nearly the lowest out of all the comps. In fact, it’s only 2k more than the comp with no finished bsement, no walk out basement, no 3rd car garage, no tile roof, no custom master shower, and 300sq ft smaller basement.

    Sean

    • says

      Hi Sean. I appreciate you reaching out. I’m sorry to hear about your situation. Maybe the appraiser was having a bad day (or maybe the loan officer inserted the word “harassing” too to make it sound like that was the case). Unless the appraisal is a private valuation where the owner hired the appraiser directly, it really is proper for the owner to direct questions to the lender, who is the appraiser’s client. The appraiser ought to be very professional with whoever calls of course though. With that being said, this is a great question, and I actually have a blog post that may answer it. Why don’t you give it a quick read and then let’s keep the discussion going as needed. I am very happy to pitch in additional thoughts. There definitely should be a reason behind why the appraiser picked the final number. It really shouldn’t be about averaging but probably giving more weight to certain sales. http://sacramentoappraisalblog.com/2014/02/27/how-do-appraisers-choose-the-final-value/

      I look forward to being in touch. Thanks again for reaching out.

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