Q. How does a mortgage appraiser evaluate your home’s value?
A. This is an excellent question! There is a well-known cartoon that was published a few years ago with the perception of a home from the point of view of a seller, a buyer, a realtor, a home inspector and a mortgage appraiser—all very different views ranging from a castle (seller) to a home inspector (rundown house with holes in the roof, water pouring out of the basement, etc.). After the market crashed in 2008, mortgage appraisers’ guidelines were tightened up and they now use the following criteria when evaluating homes for an opinion of value to recommend to the lender: (1) The property’s current assessed value; (2) comparable homes that are the same style as the subject property (i.e. colonial, cape cod, split level, ranch, etc.); (3) comparable homes located within a mile or less of the subject property, particularly within the same neighborhood; and (4) comparable homes that have been sold no more than 6-9 months ago, with one or more that have been sold in three months or less. The appraiser must visit the property and take both photos and measurements, so they can note what improvements have been made or what condition the house is in, location, etc. Once their report is complete, it is sent directly to the lender to be included with other information for the underwriters to review before approving the buyer’s mortgage application.
Q. How does an appraiser decide what each improvement is worth?
A. Appraisers have charts that list all sorts of home improvements as well as what various factors are worth in a property. For instance, a one-car garage is generally judged as about $10,000, two-car garages are about $20,000, so if the property has one of these, the appraiser adds that value to the total. If the property is missing a garage, that value is subtracted. In a single-family house, items like fireplaces or finished basements add value, as well as the age of the furnace, a newer roof, square footage, etc.
Q. What advice would you give me about pricing my home correctly so it doesn’t take months to sell?
A. With the growth of information on the Internet as well as the popularity of DIY shows on TV, it’s often easy to think you know enough to proceed without expert advice and assistance from a licensed real estate agent. He or she will provide you with a market analysis report that includes comparable values and data on how the local real estate market in your town is performing.
Q. Is there a time of year when we should get started?
A. Certainly, more homes go on the market in the warmer months, but real estate is sold throughout the year and, in recent years as we have enjoyed advantageous mortgage interest rates, seasonal selling becomes less of an issue. In addition, with this past winter’s relatively mild weather and lower inventory, the 2016 market has been extremely active especially in the lower price ranges ($500K and below) that are attractive to first-time buyers or those who are planning a move from condos to single-family homes.
Many buyers look in the “off” months when there is less competition from buyers whose children need to finish out the school year or whose companies have not planned on transferring them until the summertime. Buyers also comprise many expanded categories beyond the traditional nuclear family—there are increasing numbers of single buyers, unmarried couples, family members looking to move in together (mother/daughter, parents living with single children, brothers and sisters, etc.), couples in the LGBT community, etc. Home ownership continues to be a big focus for anyone looking for a good investment, retirement planning, changes in family size and stability in lifestyle.
For recommendations, don’t hesitate to contact me for more information. I will help you with a comprehensive market analysis (CMA) of your home, answer any questions you have and advise you on how to approach preparing it for sale—now or anytime in the near future!
By Barbara Ostroth