Four Tips on the Most shared Mistakes of an Appraisal
1. The main part of the appraisal is the subject information. If this information is incorrect and the underwriters can’t clarify the data that they need, the appraisal will have to be reviewed for accuracy. For example, when reviewing an appraisal in Spokane, WA, I noted that the parcel number was incorrect. This is one of the reasons why this appraisal was under review.
When the parcel number or the address is incorrect, this results in questions as to whether the appraiser appraised the correct character. The first meaningful to writing a good Spokane appraisal is to be sure that all of the data in the appraisal report is correct to the best of your knowledge. Double check these basic items. If they are different, you’ll want to explain why.
2. One of the most shared mistakes that appraisers make is to select comparable sales that are not similar to the subject. Sometimes an appraiser has no choice. If the appraiser does this, they must explain the reason why they chosen these comparable sales.
If the home that I’m appraising is a ranch style home and I choose a two story home with a basement, then I must explain why I used this sale. For example, “comparable sale number two is a two story home. The reason I used this home is because there are limited sales of homes in the immediate market area. Comparable two is used to sustain homes within the immediate market area. For a without of better sales, this home is used.”
3. Using sales outside the market area when there are closer sales in the immediate market and not explaining why these sales were used. If you were an underwriter and you’ve located three other sales in the area that appeared to be similar to the home that is being appraised and the appraiser used homes outside this area, the underwriter will always ask the question why these sales got ignored.
4. Understanding bracketing of the comparable sales is one of the most important keys to consider when writing a good appraisal. Let me explain what bracketing is. When you are writing something and you put [brackets] around a information, you simple surround it with the brackets. This is the same concept that real estate appraisers use, but they bracket the criteria in the appraisal.
The goal of the real estate appraiser is to bracket as many criteria that may influence the value of your home. The most important items to bracket is the square footage of your home, the size of your lot, Bedroom and bathroom count, the garage count of your home and any larger outbuildings, swimming pools or any other rare features.
For example, if your home is 1000 square feet, then the appraiser will want to locate one home that is 900 square feet and one home that is 1100 square feet and maybe already one that is the same square footage of the subject.
If you just got your appraisal back and you are wondering if they did a good job, go by the four main tips to writing a good real estate appraisal. If they missed some of these criteria, I’d consider a second opinion or at the minimum have the appraiser explain any of the missing items listed above.