Lake Lanier Blog


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As a Buyer's Realtor you want to make sure your client is not overpaying for one of the largest investments of their life...Their Home!

As an Appraiser, I do not like to see a large gap between intrinsic value and market value. What is the difference and why does it matter?

Intrinsic value: What does that home really offer to the buyer, without outside influences taking hold. Things like square footage, location, lot, quality, condition, style, appeal, etc. 

Market value on the other hand is what a willing seller and willing buyer (both acting with reasonable knowledge of the market and under no undue distress) agree to on a sales price. 

Technically, Appraisers are reporting market value for a property. However if that sales price is LESS about the property and more about outside influences, that can lead to market corrections later on where the buyer will LOSE! Right now I am seeing a larger gap than is preferable in some markets.

So what are the top influences which make a buyer want to pay more than intrinsic value?

1. Low Supply
2. Low Interest Rates
3. Low Unemployment Rates
4. Employers giving workers better raises
5. More Job Opportunities in the area

If buyers are willing to pay MORE than the home is actually worth intrinsically, this defines a new market value for the area which is based upon what I like to call a very shaky foundation. 

So, my appeal to all Realtors and Buyers out there.....focus more on intrinsic value rather than market value (actual sales prices). If they are close to each other, you can feel safe with the investment. If however, they are far apart, buyer beware as your investment may not be as solid as you might think!

Thanks for reading......and as always....Thank you for your referrals! 


Intrinsic value vs. Market Value. What's the difference.

 
BY 
Real Estate Appraiser with Lanier Appraisal Service CR004373
 

 

As a Buyer's Realtor you want to make sure your client is not overpaying for one of the largest investments of their life...Their Home!
 
As an Appraiser, I do not like to see a large gap betweenintrinsic value and market value. What is the difference and why does it matter?
 
Intrinsic value: What does that home really offer to the buyer, without outside influences taking hold. Things like square footage, location, lot, quality, condition, style, appeal, etc. 

Market value on the other hand is what a willing seller and willing buyer (both acting with reasonable knowledge of the market and under no undue distress) agree to on a sales price. 

Technically, Appraisers are reporting market value for a property. However if that sales price is LESS about the property and more about outside influences, that can lead to market corrections later on where the buyer will LOSE! Right now I am seeing a larger gap than is preferable in some markets.

So what are the top influences which make a buyer want to pay more than intrinsic value?

1. Low Supply
2. Low Interest Rates
3. Low Unemployment Rates
4. Employers giving workers better raises
5. More Job Opportunities in the area
 
If buyers are willing to pay MORE than the home is actually worth intrinsically, this defines a new market value for the area which is based upon what I like to call avery shaky foundation. 
 
So, my appeal to all Realtors and Buyers out there.....focus more on intrinsic value rather than market value (actual sales prices). If they are close to each other, you can feel safe with the investment. If however, they are far apart, buyer beware as your investment may not be as solid as you might think!
 
Thanks for reading! 
 
About Us
 
Lanier Appraisal Service
5747 GARDEN WALK
Flowery Branch, Georgia 30542
770-967-0753 
Visit Our Website
 

 

Intrinsic value vs. Market Value. What's the difference.

 
BY 
Real Estate Appraiser with Lanier Appraisal Service CR004373
 

 

As a Buyer's Realtor you want to make sure your client is not overpaying for one of the largest investments of their life...Their Home!
 
As an Appraiser, I do not like to see a large gap betweenintrinsic value and market value. What is the difference and why does it matter?
 
Intrinsic value: What does that home really offer to the buyer, without outside influences taking hold. Things like square footage, location, lot, quality, condition, style, appeal, etc. 

Market value on the other hand is what a willing seller and willing buyer (both acting with reasonable knowledge of the market and under no undue distress) agree to on a sales price. 

Technically, Appraisers are reporting market value for a property. However if that sales price is LESS about the property and more about outside influences, that can lead to market corrections later on where the buyer will LOSE! Right now I am seeing a larger gap than is preferable in some markets.

So what are the top influences which make a buyer want to pay more than intrinsic value?

1. Low Supply
2. Low Interest Rates
3. Low Unemployment Rates
4. Employers giving workers better raises
5. More Job Opportunities in the area
 
If buyers are willing to pay MORE than the home is actually worth intrinsically, this defines a new market value for the area which is based upon what I like to call avery shaky foundation. 
 
So, my appeal to all Realtors and Buyers out there.....focus more on intrinsic value rather than market value (actual sales prices). If they are close to each other, you can feel safe with the investment. If however, they are far apart, buyer beware as your investment may not be as solid as you might think!
 
Thanks for reading! 
 
About Us
 
Lanier Appraisal Service
5747 GARDEN WALK
Flowery Branch, Georgia 30542
770-967-0753 
Visit Our Website
 

 


Posted by Mary Thompson on June 6th, 2018 2:23 PMLeave a Comment

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Had a great morning on WDUN Talk Radio 102.9 FM talking with hosts and local Realtor Kim Waters about Real Estate and Appraisals. Very good information and exchange for the listeners. 

Doing it again December 1st. Thanks to the Home Improvement Show hosts Tracy and Steve and Kim for the invite to be on the show. 



Thanks to the people of Hall County, GA who voted Lanier Appraisal Servicethe BEST Real Estate Apprasier in Hall County, GA. We are humbled and we thank you. 

 

Thank you to THE GAINESVILLE TIMES for putting on a great party for all the winners in their respective business categories!

 

2018 is looking up!!! 


Lanier Appraisal Service voted Best Appraiser in Hall County, GA 

 
BY 
Real Estate Appraiser with Lanier Appraisal Service CR004373
 

Thanks to the people of Hall County, GA who voted Lanier Appraisal Servicethe BEST Real Estate Apprasier in Hall County, GA. We are humbled and we thank you. 

 

Thank you to THE GAINESVILLE TIMES for putting on a great party for all the winners in their respective business categories!

 

2018 is looking up!!! 

 

Lanier Appraisal Service voted Best Appraiser in Hall County, GA 

 
BY 
Real Estate Appraiser with Lanier Appraisal Service CR004373
 

Thanks to the people of Hall County, GA who voted Lanier Appraisal Servicethe BEST Real Estate Apprasier in Hall County, GA. We are humbled and we thank you. 

 

Thank you to THE GAINESVILLE TIMES for putting on a great party for all the winners in their respective business categories!

 

2018 is looking up!!! 

 


Posted by Mary Thompson on February 5th, 2018 3:34 PMLeave a Comment

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November 28th, 2017 11:13 AM
As a Real Estate Agent or Homeowner, value per square foot is how you determine listing prices...right?  Not so fast!

As an Appraiser I do not even look at the price per square foot until AFTER I have determined the value of the Subject property; which is determined by who? Not the Appraiser but the MARKET. After I have determined the value of the Subject, if price per square foot is way off from the other sales then I must look at other contributory factors causing this number to be off.  This is a complex problem that is for the Appraiser to decide. 

So what do YOU do as a Real Estate Agent or Homeowner.

First some basic math: 

1. Sales Price / Square Footage = price per square foot.

Example: You have a $200,000 sales price with 1,800 square feet which equal $111.11 per square foot value. Did you check my math? GOOD, I wanted you to do that!

While the sample above seems quite easy, the problem lies in what ELSE is considered in price per square foot?

The lot value, the quality, condition, basement size and finish, out buildings, pools, etc. All of these are considered in the price per square foot. 

So where is the PROBLEM?

Unless you are dealing with a "cookie cutter" home in a development where all the lots are basically the same size and same value and the homes are similar in square footage and quality, using price per square foot to SET your listing price is a mistake without further work needed! 

If you are dealing with Lakefront property, price per square foot flies right out of the window because the land or site value is in many cases the lions share of the total value. Same holds true if you are dealing with Acreage, Golf Course homes or homes with mountain, river or other water views.

So what do you do in order to set price? You must FIRST and foremost determine the value of the LAND or DIRT that the home sits on. This is crucial. Then compare that to the other comparable sales you are reviewing and their lot values. Once you subtract the site values from these sales, you can deal with the remainder of what the property offers. Hopefully you are working with homes that are at least close in size, quality and condition, otherwise you have to extract those values from the other sales to make them EQUAL to your Subject property. A much more involved process and that is where an appraisal comes in handy!

Once you subtract that land value from the total Sales price using the sample above, if the lot is worth $40,000 you now have a working number of $160,000 for the home ($200,000 - $40,000). Now divide the total adjusted sales price of $160,000 by the 1,800 S.F. and you get $88.88 per square foot for the home or improvements to the site as Appraisers call them.

That number is the true MARKET VALUE per square foot for this home. When you review the appraisal report their adjustments for square footage variances, should approximate this number, assuming you have subtracted all other factors about the improvements which could rise that number unduly, such as outbuildings, barns, pools, etc. 

Remember we are NOT talking Cost to build per square foot since the market typically does not pay the FULL price per square foot on resale homes. 

The process above is a very BASIC, but workable approach for you to set the price per square foot for the home you want to list. 

Thanks for reading and please feel free to SHARE by clicking the forward this email link below. 

When you do not want to deal with this process, call us for a Pre-Listing Appraisal. This makes yours and your sellers lives alot easier! This also takes the pressure off you as an Agent to come up with a good listing price for a home which is solid and realistic.   

Have a great Holiday Season! As always we thank you for your referrals. 




 

THE PERFECT LISTING FROM AN APPRAISER'S PERSPECTIVE...

 

 

Appraisers review FMLS/MLS listings every day including all photos, commentary, etc. What you do and say in those listings not only helps your Seller get the highest possible price, but it can also mean higher Appraised Values and fewer calls from Appraisers! You would be surprised how many Listings I see that fall short of the below suggestions.

 

First rule of Thumb: Pretend you are selling YOUR own Home. Some of the best listings I see are Owner/Agents. Do your Sellers a great service and give them the same attention to detail as you would your own home. The more Appraiser's have with regard to the Property the better chance for positive results on the Appraisal.

 

1. PHOTOS: Clear, sharp, high resolution photos: Include as many photos as the Listing will accept. Inside photos should include at the least; Living/Family Room, Kitchen, Master Bedroom, All Baths, Dining Room, Basement Rooms and All Special upgrades and features of the home Inside and Out. You do not need a professional photographer but when someone goes to CLICK on your photos in FMLS/MLS they need to be large enough to see the details. Virtual Tours of course are a plus.

 

* If you are dealing with Lakefront, Golf Course, Mountain View Homes, PLEASE include a view of these amenities from the REAR of home from the Deck or Patio. This is very important for the Appraiser and the Buyers to get a feel for what their views are FROM THE HOME. For Lake of course always include views of the lake from the Boat dock, the boat dock itself, the views straight out from the dock, to the Right and to the left of the dock and toward the home so you can see things like Rip Rap shoreline and how close the home is from the dock as well as the path to the dock.

 

* Please UPDATE your photos for the Current Season. Nothing screams this home has been on the market a long time than a Winter Time Photo in the Summer.

 

2. In your description of the property under PUBLIC comments, include all major renovations & approximate year. If you have total costs of all renovations include those as well.

 

*Sample: Lakefront home with year round views. Renovations include: New HVAC:2012; New Roof: 2015: New Appliances: 2010; New Floor coverings: 2011. Owner put over $50,000 in total renovation in past 6 years. Include anything that is not obvious in the photos and any special amenities. Then refer them to commentary under each photo. Since you are limited in your Public Remarks section use that section below EACH photo for more information; i.e.; Under your Kitchen photos if you have upgraded appliances say something like this: "Wolf Stove, Dacor Dishwasher, Sub-Zero Refrigerator"  The more details the better both for the Buyer and the Appraiser so that they can give credit where credit is due to upgrades in the kitchen or the home in general.

 

This kind of commentary is good for every room in the house that includes any kind of special features that may not be obvious in the photos themselves. Leave NOTHING to chance. You have the room to spotlight the home, use every bit of it for the best result.

 

3. DIRECTIONS: Please do not just say USE GPS in that space. There may be some Appraisers and Buyers who actually do not have GPS or their GPS may be out of date on certain streets, etc. PLEASE list out turn by turn direction to the property. Appraisers have to drive by all Comparables, so clear directions is always appreciated! Buyers will like them too.

 

4. Please be very careful to list all amenities about the Listing correctly in FMLS/MLS as the Appraisers use this information in their reports not only for the Subject but for the Comparable Sales.

 

5. SQUARE FOOTAGE/SOURCE: Please do NOT state "Appraisal" in this field unless you have an actual Appraisal on hand. If  you get this from Courthouse Records State "TAX RECORD". You do not want another Appraiser using "The Appraisal" number against your Listing if indeed the Tax Record includes square footage in the basement (which many times they do). This could result in a REDUCED value for your under contract Listing!

 

 In MLS you can separate square footage in the upper levels from the Basement. Please use that space to so designate that square footage. If you want to show the TOTAL  square footage for better search results and superior selling potential then in the Public remarks please state the following:

 

" 3,450 total square feet all levels; 1,550 is in the basement and 1,000 of that is finished" OR  if you have Appraisal say something like: 2,450 S.F. on the upper level/s and another 1,250 in the basement of which 1,025 is finished. Total heated: 3,475. IF YOU RUN OUT OF ROOM UNDER COMMENTS, PUT THIS UNDER YOUR BASEMENT PHOTOS ON THE LISTING.

 

 

6. Comments to Avoid in your Listing:

 

 "Priced to Sell" : I don't know why, but this is the Kiss of Death. In almost every case when I see this I look at days on market and it has been on the market longer than average. Isn't the whole idea to price homes to SELL? Do you really need to say this in a listing?  Use this space to outline more features of the home.

 

"Won't last long": Again many times I see this and Days on market are longer than typical. If you DO say this.....if that home is on the market for over 30 days, remove that wording.

 

7. Use those attached documents in your Listings to your advantage in the Listing. Include the DISCLOSURE STATEMENT ALWAYS. It is very helpful for Appraisers as well as Buyers. We need to know how old components are in the home up to 15 years. Also include PLATS. Very helpful for Appraisers.

 

 

8.  Site Section/Description: I see many times where it lists Cul-De-Sac, when it is not. It may be on a cul de sac street further up, but  not IN the cul de Sac. So technically is should not say cul de sac.

 

 

9. I know it is hard to be CREATIVE in all of your listings and not fall into the same "pat phrases" but try to point out that special thing or things about the home that set is apart from its competition and make it something that buyers want to see and Appraisers will appreciate about that home.

 

10:  Lakefront Property: If  the home is permitted for a larger dock note that in comments section of Listing. This does make a difference on Lake Site Value (permit type).

 

** Please do NOT state DEEP WATER Dock or especially Drought Proof if it goes dry in droughts of  under 10 feet. I see this wording many times and when I pull it up on Google Aerial, which other Appraisers and Buyers will do and see Dirt under the dock, Deep Water does not seem to accurately describe this lakefront lot.  I see this more times than I care to Admit.

 

** If you or the owner has measured the depth behind the Dock, then state that amount in the Listing. If we are below Full Summer Pool, you can also state that, i.e.; "Dock has 13 feet of water behind the dock with Lake down 2 feet"

 

This is it for now. Remember, sell it like it is your own house and you can't go wrong! Thanks for Reading and Feel free to SHARE with your office.

 

 

 


Click the link below for the Blog on this important topic!
How will appraised values keep up with increases in the market?



Realtors have more control over how the
 Appraisal goes than they may think. If you
follow these Top 10 "Rules of Engagement"
with Appraisers you will be doing your Sellers
 a huge favor. Time upfront can reduce the
time you may spend on the back end trying
to deal with an appraisal that comes in under
the sales contract. Remember you are trying
to get the HIGHEST  possible price for your
 listing so this takes some work.
Your sellers will love you for it!


* Pretend you are selling this home to the
Appraiser  AND pretend it is YOUR home.
Some of the best Listings I have seen are
Owner/Agent Listings.


1. PHOTOS....Good Quality and many of them
please! Include the views from the rear of the
home especially when dealing with 
Lake, 
Golf Course or Acreage
 homes, etc. The photos do not have to be
professionally taken, but they need to be of
 high quality so when you click on them you
 can see all the details. I see way too many
small resolution photos that do not open up
 to larger, clear ones when you click on them. 


** Use all the space you can under EACH photo as descriptors.
Appraisers read these every day. The more you add the better, ie;
 Comments under the Kitchen photo could read:
 " Renovated kitchen in 2012, new granite counters,
new GE Profile Stainless Appliances, New Tumble stone
 backsplash, New upgraded lighting. Owner put over
 $30,000 into new kitchen upgrades "
 The more details
the better as they will provide valid support for a
higher value in the appraisal
. Cost of all upgrades
is not required but DOES help!


2. Provide packet of information in the home with
 "Appraiser Information" written on the outside of the envelope.
 Many times Appraisers will not call ahead, so have this
packet readily available in the home. If they do call, 
tell them the packet is there which includes
information on how you determined an appropriate
Listing Price and if a pre-listing appraisal was done,
tell them you have included a copy in the packet.


** Make sure to add comments on each FMLS/MLS
sheet stating how they DIFFER from the Subject.
 Very helpful especially if you have been inside
 those other homes since Appraisers do not see
the inside of the Comparable sales, only the Subject.


3. DO provide appraiser with insider information you may have about the home or the neighborhood that they may not have: Include
 a cover letter to the Appraiser which would include things like why the current owner purchased this home and why the current BUYER is purchasing this home. What are the perceived value added amenities of this home for a buyer. If you know of positive things that are happening in the area or neighborhood, include these. This can be very helpful and so worth your time to provide to the Appraiser.

4. Do include a BRAG Sheet with costs of renovations, additions, updates and the year/s completed. This is Very important for getting the most out of an Appraisal. 

5. Call Appraisers Back right away! You do NOT want them guessing on something important and you do not want the Appraisal delayed waiting for your call back. Appraisers typically call the day or day before the report is due as that is when they are working on it, so please call them back as soon as possible, whether it is your listing or not. Remember one day they will be calling a Fellow Realtor on one that impacts your deal. 
 
6. Do NOT price your listings over anything else that has sold in that neighborhood unless you can provide details and reasons why! Lenders have real issues with appraised values over anything else that has sold in that neighborhood, so be prepared to support your actions on your listing price along with other sales that will prove this home is worth being priced over all the others.  
 
7. When you select Comparable Properties make sure you Bracket your Comps...Provide sales and listings that have sold BELOW and ABOVE your sale. This is how Appraisers must chose comps, so please follow the same process and again note on each listing sheet why they are inferior or superior to your Listing.
 
** Remember one CRUCIAL thing when it comes to Comp Selection:  Choose only those sales that a Buyerwould consider as a good replacement for the subject at the same or similar price if the Subject was no longer available. Don't rely solely on SALES PRICE or Price per Square foot for your Comp selection. Appraisers do not do this so you should not do this. Do not go into a superior development with superior homes to justify your listing price or it could backfire on you....Adjustments for location, square footage, quality and condition will be made and this sale could actually reduce the value for your Subject property. **Update per Bill Cobb's comment: Do not forget SELLER Paid Closing Costs/Concessions. If a seller pays well more than the typical closing costs, you MUST adjust downward against that sale as Appraisers will do this. This is Required by Fannie Mae to adjust that sale in the amount that it has effectively increased the Cost of that Home over what the typical market price should have been. 
 
8. Consider using 2nd Gen Square Footage Datasource which comes from actual Appraiser measurements of the homes. This data will help you to accurately determine how much larger or smaller the homes are...the same way an Appraiser would. GLA (that area above ground or grade is what appraisers count) Basement level finished space is considered separately and shown on this website along with other physical data about each home which has been measured. 


Cost is very reasonable at .10 cents per address and can be printed off for your files.
 
9.  
Do  not say things to Appraisers like: "You should have no problem appraising this home at the Sales price"... or... "We need a GOOD appraisal on this one". Remember one thing...Appraiser's objective is to protect the bank and not to make the deal work. 
All you will do it place doubt in the Appraiser's mind if you make comments like this and trust me I have heard them many times! Just give them the packet of information already discussed and this will go a LONG way to getting the best possible value that the market will support for your Listing.
 
10. Do tell Appraisers if you had multiple offers and the details of those as this will provide them with good information about the value and demand for this property.
  
 
** IF IN DOUBT AS TO THE PROPER LISTING PRICE FOR A PROPERTY, GIVE US A CALL FOR A PRE-LISTINGAPPRAISAL in North Georgia. THERE ARE SO MANY GOOD REASONS TO HAVE THIS DONE AND SETTING THE RIGHT PRICE SO THE HOME WILL SELL IN A REASONABLE AMOUNT OF TIME IS THE BEST REASON OF ALL!
 
 
Thanks for reading my newsletter. If you know of anyone who would be interested in having this sent to them on a monthly basis there is a link below to forward this to them. 
About Us
 
Lanier Appraisal Service
5747 GARDEN WALK
Flowery Branch, Georgia 30542
770-967-0753 






This is perhaps the most asked question of Appraisers...How much do you "give" for a Finished Basement vs. Unfinished, A Pool, Bathrooms, Garages, Fences, Boat Docks, Barns, etc.

The answer is.....I cannot tell you..... WHAT you ask? Why not, you are the Appraiser. 

Back in the Old Days when Appraisers were trained by their Mentors, they were given a Sheet that outlined what adjustments should be made for these types of amenities almost regardless of the price range of the home!

This was DEAD Wrong! Why? Because it is incumbent upon the Appraiser to make MARKET Based adjustments for any and all amenities including square footage, beds, baths, basements, pools and Boat Dock Permits. How do we do this? By Extraction and Matched Pair Analysis (topic for another newsletter) Therefore we cannot give you a set dollar amount for amenities!

Fannie MAE has finally loosened the NOOSE that kept Appraisers from making truly market based adjustments. That noose was what Appraisers call NET and GROSS Aggregate Adjustments. Fannie MAE up until December 2014 had a Guideline in place that Appraisers Stuck to like Glue (Present Company excluded as I always took issue with these guidelines) and that was to keep those adjustments to the comps low enough so that these Aggregates did not exceed 15% for Net and 25% for Gross Adjustments. 

The problem with this was that the TRUE market based adjustments which were typically higher were not being made so that Appraisers would fly under the 15% & 25% aggregate rule and would not be asked by lenders to further explain themselves on their adjustments. Many times LENDERS would make the Appraiser pick a different comp just to make sure these Aggregates were not exceeded!!

In an idealistic world one would think the the lower the number of adjustments the more comparable the property and therefore the Aggregates would NOT be exceeded. 

Well, we all know properties have many characteristics and I would much rather use a home in the same development that was similar to the subject except for some square footage and finished basement variances which I could extract market based adjustments from, rather than to use comps outside the Subject Market area just because they were very similar to the subject in square footage, basement finish etc. You may be entering into a neighborhood that is NOT a good indicator of replacement for the subject and if a location adjustment is not made you may be under valuing the property!

I know this is a lot of technical stuff, but Fannie Mae AND Lenders with their own requirements that have nothing to do with Fannie Guidelines, have for far too long kept a Noose around Appraisers necks and the result was an UNINTENDED Consequence.....NON market based adjustments to the Comparable properties and inaccurate Appraised Values. 

Next Month.....I will be talking to you about BRACKETING Values....Another Pet Peeve of yours truly that Fannie and Lenders have forced on Appraisers in order to conform and in my opinion should be removed by Fannie Mae. 

Thanks for reading and as always we appreciate yourReferral Business......Keep it Coming!


About Us
 
Lanier Appraisal Service
5747 GARDEN WALK
Flowery Branch, Georgia 30542
770-967-0753 
Visit Our Website
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Lanier Appraisal Service | 5747 GARDEN WALK | Flowery Branch | GA | 30542



REALTORS YOU HAVE MORE CONTROL OVER APPRAISALS THAN YOU THINK! READ ON....

Appraisers.... start telling Realtors what Lenders YOU have good experiences with...It will help to weed out the BAD Lenders if Realtors are more selective in who they chose to work with.

Here are steps REALTORS can take now to have an impact on the Appraisal Process.

The LENDER you choose can and DOES have an impact, now more than ever on how the Appraisal will go. You have significant Power over what Lender the Buyer chooses and these are the 4 questions you need to ask every lender before you refer business their way.

1.Will the Lender use an AMC (Appraisal Management Company) if so...Buyer Beware! They are notorious for underpaying their Appraisers,requesting unreasonable turn times for Reports, yet the entire process is slowed down from Appraisal Request to final delivery to their Lender Client when an AMC is involved.

** I believe that You get what you pay for and if Appraisers are paid below Reasonable & Customary Rates, their report will likely not be top notch **

2.Does the Lender have In-House Appraisal Ordering and/or In-House Underwriting...If not Buyer Beware. Precious time is saved by the in house process but more importantly, in most cases, these Lenders do not continually ask for dozens of revisions to the Appraisal Report, resulting in further delays and resulting in Appraisers being Conservative just to Fly UNDER the Review Radar. Not what you want!

3. Does the Lender use as part of their Review process, Fannie Mae's CU (Collateral Underwriter). If so ask them what weight they will place on CU. If alot...this is a Red Flag. Why? Because CU will force yet more revision requests and explanations from the Appraiser, including review of and inclusions of yet more comparable sales (increasing Appraisal Fees to the Buyer), further delaying the process and further forcing Appraisers to remain CONSERVATIVE on their appraised values to fly under CU radar. FANNIE MAE has already put Appraisers on notice that if they find things in their report that are not consistent with other Appraisers in the area or not consistent with their own past reports, they will be put on a Warning List and Finally if it continues a DO NOT USE LIST. That means the Appraiser is out of work essentially.

Appraisers are not at all happy and are running scared of Fannie Mae CU.Some fears are warranted while others are not,but the reality is, it is here to stay. They provide Lenders with CU review information but they are NOT providing Appraisers with this Review process to run their appraisals through before delivery to the client. This process would at least let the Appraiser see if there are any issues with report upfront and they can EXPLAIN why they did what they did at that point, instead of after it is delivered to the Client.

Many Appraisers also question being compared against the masses of other Appraisers. They could be the only one that gets it right, but if the masses say one thing and the one who got it right says something else, they will be held to the mediocre standard of the masses. Many issues come to play with CU and most will be unintended consequences.

4. Does the lender have a pool of Appraisers that are familiar with the areas they serve.This is very important as you well know.Some Realtors are placing in their Sales Contract that the Appraiser must be knowledgeable of the area or the special property...Such as Lakefront or Acreage or Golf Course homes and if not they want another Appraiser Assigned to the Case. Fannie Mae Requires of Lenders to obtain Appraisers who are knowledgeable of the area or they MUST acquire that knowledge.

** What I am NOT suggesting or inferring in any way is that if you pick the "Right" Lender the Appraised values will always support the Sales price...not at all! We do not want to go back to that unhappy place where Appraisers were pressured every step of the way to hit a number and we all know what happened in the market just a few short years ago....Let us not have short term memories on that time period.

What I AM suggesting is that you use a Lender who has a good pool of EXPERIENCED Appraisers and a Lender who Allows the Appraisers to use their years of education and ongoing experience to provide them with the True Market value for the Subject property and NOT second guess the Appraiser's knowledge every step of the way. All this does is undermine the Appraiser and then the Appraiser decides they are going to remain Conservative and deals will likely fall apart. Not a good thing!


So you have a home with an addition. Was it Permitted by the County? 

 

How will the lack of a building permit affect the Appraisal and  The Home's Value? 

 

You will be happy to know that they are NOT required by HUD or for Conventional Loans....However.....there is a caveat. 

 

When the Appraiser inspects the home, if the addition or finished basement or enclosed Garage, etc. has not been completed in a Workmanlike, Professional Manner this condition WILL be noted in the report. Then it is up to the Underwriter to determine if further inspections or investigations into the addition or finish work is required OR if they will decline the Loan all together. 

 

So what does Workmanlike mean to an Appraiser? It means the addition must blend or flow well with the remainder of the home and it must not look "thrown together" or finished off in an inferior way, with inferior materials or with an inferior foundation, etc. As a Realtor, you KNOW what I am talking about. If you think the addition or finish work is marginal or sub-standard, so will the Appraiser. 

 

One IMPORTANT thing to note, MOST Appraisers will NOT inquire about Permits for Finished Basements or Bonus Rooms over Garages. It is quite common for Homeowners to Finish these areas without getting a Building Permit, even though many Counties require one whenever Plumbing or Electrical work is involved. Some Counties require permits for Decks and Fences and again, most appraisers will not even ask if a Permit has been pulled for this type of addition. Some will not ask  about permits for enclosed Garages, it depends upon how it was finished off and how it compares in quality and condition to the rest of the home. 

 

The work should conform to building codes and standards in place at the time of the addition or finish work. Since Appraisers are not building inspectors and do not have the building codes handy they will typically include a disclaimer in the appraisal report stating there was an addition, it has been completed in a workmanlike, professional manner and it is assumed that the work conforms to all current building codes and standards at the time of the addition. Then we will supply plenty of photos for the Lender to Review. 

 

The Key is how do these additions or finished space CONTRIBUTE to value?  The Appraiser will review sales of homes with similar additions and total square footage to determine how much added value there is and make adjustments accordingly. It most likely will not get same value per square footage as the remainder of the home. 

Basements as many of you know are valued lower per square footage as dictated by the market. Enclosed Garages in most cases command less per square footage in the market. HOW much Less? That depends on the area, the price range, the quality of the enclosed space, etc. 

If the addition or finish work in basements or enclosed Garages is sub standard, little to NO value will be given. In the Case of  FHA Loans, the Lender may require the Appraiser give NO value to the finished space and they May also decline lending on that property. It is their call to make. We just report what we see and provide photos to help them make their decisions on the Loan.

 

If you have any questions about Building Permits and additions, contact me and we can help. 


 

** CHECK OUT LINKS TO THE LEFT OF THIS ARTICLE FOR HALL & FORSYTH COUNTY BUILDING PERMIT REQUIREMENTS . 

 

 

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Lanier Appraisal Service
5747 GARDEN WALK
Flowery Branch, Georgia 30542
770-967-0753 
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Posted in:General
Posted by Mary Thompson on March 22nd, 2015 9:52 AMLeave a Comment

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