Why didn’t the appraiser take into consideration your custom switch plates, new baseboards, door knobs or fresh flowers in the garden? Sometimes I hear from home owners, real estate agents and loan officers about things like this.
Let me first say that there are three options to consider: 1) The appraiser missed the items in the final value; 2) The appraiser didn’t really think the items made a difference for the final value; 3) The appraiser considered the items in the final opinion of value, but didn’t make an adjustment for each item in the appraisal itself.
An example of switch plate covers: Do switch plate covers make a difference in value? Let’s look at two different switch plates from Lowes below. The nylon plate on the left costs $0.39 and the satin nickel plate on the right costs $6.54. If a house has 20 spaces for switch plates, the cheap nylon plates would cost $7.80 total, whereas the more expensive satin nickel plates would cost $130.80. The difference between the two types of plates is $123.00.
Does this mean your property is worth $123.00 more? Theoretically, if the market shows that a buyer is willing to pay $123.00 more for your house with satin nickel plates instead of a house with nylon plates, then the appraiser should consider the value impact. But realistically, appraisers aren’t going to focus on that type of nitty-gritty data (it would be nearly impossible to track down anyway), but the appraiser will often consider small ticket items like this in the final reconciliation of value. This means if your house is fairly similar to the comparable sales used in the report, but you do have quite a few extra features like more expensive switch plates, upgraded hardware, new baseboards, updated ceiling fans, new light fixtures, etc… the appraiser can take all these things into consideration during the final reconciliation of value and potentially reconcile your value to a higher end of the range instead of the lowest end of the range (if that’s what your many small improvements warrant of course). If you think that sounds crazy, let me ask you this. Have you ever made an offer on a house for $123.00 more because of switch plates?
Give the Appraiser a List of Updates: It’s helpful to the appraiser when the owner or agent writes out an itemized list of all recent improvements – whether big or small. Include costs too if you have them so the appraiser knows your bathroom remodel was $15,000 instead of $2,000. Basically, let the appraiser know about any way you’ve put money into your house – even switch plates.
What if the appraiser really did miss things that impact value? If you do feel the appraiser missed value in your report and you plan to challenge the low appraised value, then it’s time to pick apart the appraisal and send in some thoughts to ask the appraiser to take a second look and reconsider your points. But don’t bring up small things like switch plates and baseboards when you do this. Focus on the big-ticket items that are really going to sway value. Focus on the following:
Discuss any more relevant comps that the appraiser did not use.
– This is one of the strongest points you can make to help the appraiser reconsider the market.
Focus on comp selection, adjustments and items that impact value:
– Did the appraiser use sales similar to the subject in condition?
– Is there a difference in the level of upgrades between the subject and comps?
– Are the neighborhood boundaries correct?
– Is there any big difference between the reported square footage or bed/bath count in the appraisal report in comparison to what you know to be accurate about the subject property?
– Is there a value difference between distressed and traditional sales in the neighborhood?
– Are there any major location differences unaddressed? Busy street? Next to gas station?
– Are current listings similar in price level to recent sales? Listings can often show us the direction of the market (up or down).
I hope this was helpful. Please let me know if you have any questions, insight or stories to share. I always welcome comments below as well as emails.
Do you have custom switch plates?
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YES – I have custom switch plates! And they do make a difference in your home.
We’ve replaced most of our standard 0.39 cent plates with more expensive ones. It’s the small things that help a house look nice. We still have some we’ve yet to replace. It’s on the list…
Thank for your timely and informative information. I have been suggesting a pro-active approach to agents and owners. I suggest that they interview the appraiser before the inspection, to verify their geographic competency, and then send them good data about features and comps.
But this is more work, than just waiting for the appraisal to come back, and then complain & have to “paddle upstream”. What do you think?
Jim
Hi James. Thanks for checking in. I think it’s definitely more work for the agents, but that’s a part of business these days. That’s how the market is. The agent has the role as an advocate for their client, so this is simply an outworking of their advocacy. In contrast, the appraiser is a neutral party who does not have any “skin in the game” so to speak. There is a huge difference between the role of the appraiser and the role of the agent, and I think it’s often misunderstood in the marketplace.
A way to look at it is that people who care for these things will customize their switch plates (etc.) anyway, whereas those who would not – certainly wouldn’t pay extra. But these people that do value such things are usually picky and would choose their own specific custom plate… So they arn’t likely to pay you extra for something they’ll replace with something else anyway.
Thanks JJ. Agreed. I’d say in a custom home we might expect to see something upgraded too, but in most homes the standard cheap white switch plates are the expectation. So if a seller is not living within market expectations, it’s not on the buyers to pay more for the house just because a seller went above and beyond. And it’s such a minor issue anyway…. 🙂