Home Appraisal Tips

You may be thinking of moving on from your present home or may be thinking of a refinance to buy another one. But then, how would you determine the price you would want for your property? This is when a home appraisal or your real estate appraisal would come in handy. On the other hand, if you are thinking of a refinance, an appraisal of your home would give you an exact idea of the amount you are eligible for getting another loan. We give you some tips, which, if followed, would assure you the best possible value.

If you are thinking of a refinance, the lender would usually use the services of an appraiser that they prefer. However, on the other hand, if you want to sell your home, you can opt to choose an independent appraiser.

During the appraisal, an inspection of your home would be conducted. This would include a visual examination of your house and the condition of the bedrooms, bathrooms, kitchen, etc. The appraiser would provide an estimated value of your house, which is based on two factors. The first factor is the cost required to construct a similar house and the second element that he would consider is comparing other houses in your locality which have been recently sold.

Getting the House Ready for Appraisal

Make the House Shipshape
One of the most important home appraisal tips is to make your house appealing, you can do this by improving its exterior. The outdoor surroundings of your home should look attractive, with green grass and not dead brown one. Make sure not to leave gardening tools like lawn mowers lying around, besides keeping the plants trimmed. It’s good to have landscaped garden with ponds, gardens, etc., provided they are maintained well. Ensure that not only the overall surroundings of the house looks great, but the exterior walls are also well painted.

Clean the Interiors
A day or two before the appraiser comes, make sure that you clean the walls, kitchen, and bathroom. The most challenging part is managing the clutter. If you don’t want your house to look small and unappealing, make sure that clutter is managed properly. Even if, you are planning to take away all the furniture, it may still look dirty. Moreover, random things here and there are bound to affect the appraiser. More the space your house seems to have, more the chances of its higher valuation.

Renovate Your House
Renovation would require some money. Buyers are attracted towards renovated houses, thereby increasing the value of your house. The most important rooms which should be renovated are the kitchen and bathrooms. Try replacing the cabinetry of the kitchen, as it takes much of the wall space thereby, affecting the kitchen style. Even though the other parts of the kitchen are up-to-date, but if the cabinets are old, it would reduce your home’s value. On the other hand, the bathroom should look spacious and there should be enough storage space. If there is enough space, try to include double sinks, as they are very popular. If the floors are old, update them or else the appraiser may be put off and it may affect the valuation.

Color and Decor
Always keep in mind that buyers picture themselves living in the home they are going to buy. So, put efforts in making the house look as big as possible. The walls and floors should seem as if, they are well maintained. You need to make sure that the colors are warm and inviting, which would ensure a better deal for you. It’s affordable and easy to replace paint, so make it a point to do it before you show your house to your prospective buyers, or the bank agent if you are looking for a refinance. The decor of your house will also effect the value of your home. It may seem troublesome as you may be moving your furniture and other belongings out, but then if the buyer sees the home dirty and things scattered here and there, he is bound to have a negative impression. So make sure that your house looks spacious, large, and tidy.

Repairs
If there are any problem areas make sure you fix them. Not only would the appearance of the house be effected, but it would have an impact on the price as well. For example, if there is a leakage make sure that you fix it. You give a negative impression to potential buyers and home inspection professional by not fixing problem areas and it may get in the way of you getting a good value. If you don’t fix things, your chance of asking for a better deal would get effected.

The bottom line of home appraisal for refinancing or for selling your house is to make sure that your house is in the best possible condition. It should not only be inviting, open, and clean, it should also look as big as possible. If you keep these things in mind, the asking price would definitely increase by a great extent. On the other hand, if you are the one who wants to buy a house, don’t overlook these points mentioned above.

How to Become a Real Estate Appraiser

Real estate appraisers are professionals who use their expertise in assessing real estate, and determining its value by employing specific conditions and measuring standards. They are people who were and currently are in great demand due to their unique skills and expertise in the real estate field. Insurance firms, federal agencies, tax assessment companies, real estate agents and firms, lawyers, museums and private collectors are some of the entities, who require the services of these experts.

Appraisers may even provide other services to their clients, such as home buying, home selling, real estate negotiations, etc. Due to the many requirements that lead to property appraisals, appraisers have the option of specializing in diverse fields. If you are planning to become a real estate appraiser, you need to possess a basic understanding of how the real estate and property business works, and what are the various operational aspects.

Types of Real Estate Appraisers

Appraisers are responsible for assessing not only residential property, but also commercial and agricultural holdings. Some people hire or take assistance from a personal property appraiser to evaluate the value of their vehicles, art, jewelry, antique furniture and collections.

The services of business appraisers are utilized in order to assess and determine the value of businesses, and all its assets which most importantly comprises its brand name. A professional from the real estate appraisal field ought to be a good communicator and possess high analytical thinking qualities. He should be capable of drafting concise and lucid reports for his clients.

Becoming a Real Estate Appraiser

As in any other profession, there are certain steps for becoming an appraiser. Licensing is required in most of the cases, particularly for the appraisal to be formally recognized as legal and valid by the federal government or any financial institution. Getting the related certification requires a certain number of hours to be spent in classroom training at a real estate appraisal school, and the capability to get through the real estate exam successfully.

In the USA, prospective appraisers are at least required to possess a bachelor’s degree to be considered eligible for this profession. However, it is possible to become an appraiser even without possessing a bachelor’s degree, provided tantamount college credit hours have been obtained.

There is no particular requirement for the field of study, however, those who plan to take up this as a career option mostly choose subjects like economics, business or finance. These subjects are somehow related to the field of real estate, and serve as a good background that will help in precisely determining market valuations for property.

The needed classroom time may depend upon the state and region of residency. In some states, there is a possibility of deputizing the need of classroom time for an equivalent correspondence or online degree programs. However, the course needs to be recognized by the ‘board in charge’ of certifying real estate appraisers in a particular area.

The course generally includes topics on real estate law, local federal aspects, related ethics, and some other factors regarding the real estate industry. After the completion of the course, the next step is taking the appraisal exam. Generally, taking the exam is easier for individuals who have gained significant knowledge in the course.

The exam is normally held at particular times in a year, or may be administered on demand, depending on the state. If you need more information regarding the exam and other requirements, you need to inquire with the regional real estate licensing board.

After the completion of all requirements, you need to complete the paperwork which includes an application form. In some cases, you would also be required to pass through a criminal background check. While dealing with paperwork, ensure that you include all information regarding test results, real estate course certificate, and other related documents.

The earnings of real estate appraisers largely depend upon the clients, expertise, experience, specialty, market reputation, and the level of professionalism. The annual earnings may range from $30,000 to even $300,000.

Real Estate Appraiser Job Description

There are innumerable work profiles in the job market, making it difficult for a candidate to choose the right career. The key in making the right career decision lies in understanding your interests and doing a thorough analysis of the concerned career. Real estate is a booming field and a real estate appraiser is an integral part of this sector. His primary task is evaluating the price of a property after doing thorough research. Accurate value of a property is required during purchase or sale of property, or during mergers, for application of loans, etc. The job also comes with huge responsibility on some occasions, the testimony of an appraiser is required in court hearings to evaluate and confirm the value of a property in matters of dispute.

Where does he work?
Real estate appraisers work for real estate companies, in mortgage firms, insurance companies, banks or work privately.

What are his duties?

  • The chief duty of the concerned person is appraising a property. To accomplish this task, he has to inspect the property and evaluate factors like construction and plan of the property.
  • He should keep himself abreast with the trends that govern the real estate market.
  • After evaluating all the factors he has to prepare reports; the reports generally include photographs, description of the concerned property, blueprint of the property and the final assessment of the valuation.
  • To determine the exact value of the property he can scrutinize public records of loans and leases.
  • During the inspection process he also has to consider the impact of neighboring structures, like commercial establishments or educational institutes, on the value of the said property.
  • To determine the exact value of the property he should consult realtors, property owners and contractors to gain required information concerning the property.

What are the educational qualifications to become one?
The requirements to become a real estate appraiser are not very stringent, although the licensing procedure that is mandatory in appraising federally governed transactions is quite strict. The following three licenses are widely accepted – the State Licensed Appraiser license, the Certified General Real Property Appraiser license, and the State Certified Residential Real Property Appraiser license. The State Office for Real Estate Appraisers (OREA) manages the licensing procedure and also conducts the necessary examination. The candidates working to get a license have to complete internship at real estate companies, or with independent appraisers, or financial institutes; this is a part of the licensing procedure. There are many colleges and educational institutes that offer courses in real estate appraisal. It is important that you become a licensed appraiser, as you will have the authority to validate any property.

What additional skills should I have to be successful in this field?
The desirous candidate should have strong command over mathematics and logic. The appraisers are expected to have sound knowledge of accounting, management principles, human resources and word processes. The appraiser should have the ability to solve complex problems, and at the least should have documenting skills to describe the property with all its landmarks.

How much can I expect to earn?
We cannot provide an accurate salary figure as the pay is influenced by plenty of factors, including the state of working and the type of appraising, that is, private or public. Commercial appraisers can expect to earn around $85,000 per year. Work experience of the person can influence the salary figures to a huge extent. State appraisers are entitled to get benefits in the form of sick leaves and health plans.

What are the future prospects in the field?
The scope of the concerned field is a factor you should pay keen attention to. Most appraisers specialize in a particular type of evaluation or climb the ladder to become senior appraisers or real estate analysts. After sufficient years of experience, appraisers can also become consultants.

Becoming a real estate appraiser is indeed tough; it demands hard work from the candidate along with expertise in many concepts, especially in mathematical evaluation and in the understanding of business terms. The desirous candidate should also be ready to travel as his work requires him to visit and inspect the land property. The career is suitable for you if you have it in you to become an appraiser.

 

Real Estate Appraiser Salary

An appraiser is a professional whose prime responsibility is to assess the present real estate market conditions and find out the value of the property to be dealt with. The value finalized can be used for purposes such as loans, mortgage, home buying, home selling, etc. The salary range largely depends on the amount of work they do, location, and the type of property, whether commercial or residential.

Commercial Appraiser

Those specializing in commercial real estate appraisal focus on evaluation of commercial property. Commercial appraisers possessing a work experience from one to four years can expect a pay starting from about USD 36,000 to USD 62,000 yearly. Those with an overall experience of five to nine years can earn anywhere between USD 49,000 to USD 71,000. After 10 to 19 years in the industry, the salary range goes up to USD 50,000 to USD 95,000. Over 20 years of experience in property assessment can get you around USD 62,000 to USD 101,000.

The states of New York and California show the pay range to be around USD 52,000 to USD 106,000 and USD 59,000 to USD 95,000 per annum, respectively. States like Georgia and Texas also have a good earning potential from about USD 46,500 to USD 92,500 and USD 41,000 to USD 92,000 annually. Coming to the city-wise classification, New York City can offer about USD 70,000 to USD 144,000; Dallas also has a considerable earning scale from USD 49,000 to USD 141,500 per year. On the other hand, real estate appraisers in Miami are considered to get a yearly pay ranging from USD 50,000 to USD 105,000.

Residential Appraiser

These appraisers deal with residential properties or houses for evaluation and price assessment. One to four years of experience in real estate appraisal can make you eligible for a salary ranging from USD 28,000 to USD 49,000. The salary range rises from USD 28,000 to USD 49,000 for those possessing five to nine years experience. Those having a work experience of 10 to 20 years can expect to be paid anywhere up to USD 73,000 per annum. Professionals with over 20 years of expertise can even earn up to USD 98,000, if not more.

California and Florida are reported to be the highest paying states for residential real estate appraisers. The pay scale in these two states ranges from USD 48,000 to USD 88,000 and USD 42,000 to USD 85,500 respectively. The pay range in Maryland and Illinois starts from USD 25,000 and USD 37,000 respectively, and scales up to USD 78,000 per annum. In Seattle, the salary ranges anywhere between USD 42,000 and USD 132,000 per year. In cities like Phoenix, Atlanta, and Los Angeles, the highest pay is approximately USD 74,000 annually.

These are just a few determinants of the real estate appraiser’s salary. For trainees, the annual remuneration can range anywhere between USD 23,600 and USD 45,000. If you are wondering how to get into this field, you basically require a bachelor’s degree, a certification in real estate appraisal, and a state license for practicing the job.

Home Appraisal Cost

Be it buying or selling property, there are certainly a lot many formalities regarding the same. One of such formalities is getting a home appraisal done. This procedure has its respective advantages, both for the buyer of the house and the seller of the property.

What is a Home Appraisal?

This is a process that includes finding out the current price range of a particular property. This process is useful for the buyer, seller, as well as the bank who is offering a real estate loan for the purchase. By getting a home appraisal done, the buyer can determine if the seller is demanding more money than the market value. The bank would require these documents for processing the loan request made by the buyer for the property purchase.

On the other hand, the seller would be able to find out the value that he should receive on the real estate sale. The person or agency who does the home inspection is known as an appraiser. In the home appraisal procedure; the appraiser visits the property, clicks pictures, records the site measurements, and notes other aspects of the property, and eventually provides the requester with the report.

Types of Home Appraisals

Typically, there are three types of home appraisals that are done; namely from professional certified appraisers, real estate dealers and agencies, and online home appraisals. It will not cost you anything if you do an online home appraisal. There are some websites which give you a report according to the details you enter in, the location, and other similar factors.

Realtors may even give you reports based on their level of expertise and estimation. There are chances that they might charge you some amount for the service. If you avail the services of professional certified appraisers, you will have to pay a certain amount.

How Much do Home Appraisals Cost?

The cost is generally paid by the purchaser of the property. If you choose to get the home appraised by a professional appraiser, you may have to pay somewhere around $250 to $500. For a house worth $250,000 you may have to pay $300 roughly. Some professional appraisers may give you a separate report of the property prices in your neighborhood, for which they may charge an additional $50.

The cost also depends on how big your home is and the location of the property. Bigger the real estate, more will be the cost. For example, the overall cost to appraise a family home in New York City is $350; whereas in Bend, Oregon, it is somewhere around $475.

In some areas, the cost can even go up to a $1000. If you are want to appraise a property which is to be used for income generation, the cost would be more. In some loan programs, the buyer might be required to present a ‘drive-by’ appraisal report for loan processing, which may rule out the need for a full appraisal.

For a property buyer, spending few hundred dollars on a professional home appraisal is any time better than giving thousands of additional dollars to the seller.

How to Apprais a Mobile Home

Nowadays, when people refer to manufactured homes as mobile homes, they fail to realize the subtle difference between the two. Factory built single family homes, that conform to the code laid down by the US Department of Housing and Urban Development (HUD), are known as manufactured homes. The HUD code for construction and safety standards came into existence on 15th June, 1976. Whereas, mobile homes are manufactured homes that were constructed prior to 15th June, 1976. Throughout this article, the term mobile has been used synonymously with manufactured.

Steps Involved in Appraisals

Despite conforming to the HUD Code of safety and quality, the per square foot cost of these homes is generally 10 to 35 percent less than that of conventional homes. Hence, their appraisal has assumed a great deal of importance in the face of increasing popularity of these homes. Freddie Mac and Fannie Mae have laid down the rules for the same. At the least, the appraiser is expected to perform the following tasks:

  • Visually inspect the surroundings and the property under consideration
  • Determine the approach to be used for real estate appraisal
  • Assuming that comparable sales approach is used, the appraiser should collect comparable sales figures for recently sold neighborhood properties
  • Check the accuracy of the collected data by comparing the figures, against the numbers mentioned in the public records
  • Document the results in the Manufactured Home Appraisal Report that can be downloaded from Fannie Mae’s website

Choosing the Appropriate Method

An appraisal is an unbiased estimate of the value of the property under consideration using the standard and approved methods. The licensing requirements for appraisers vary from state to state. While appraising a property, the absorption rate for a neighborhood is particularly important. Absorption rate is defined as the length of time required to sell off the entire inventory of houses in a given neighborhood. A duration of 6 months or more is indicative of an oversupply of houses in the neighborhood and will consequently lower the price of the property being appraised.

Comparable Sales Approach: It takes into account the price of recently sold comparable properties. A comparable property is a similar property that is located in the same neighborhood. Comparable properties are also referred to as benchmarked properties. The price of the property, that is being appraised, is equal to the approximate average of the prices of the aforementioned benchmarked properties. Since no two properties are alike, the appraiser is expected to make the requisite adjustments in order to arrive at the fair market value of the said property.

Cost Approach: This approach is suitable for owners who own the land in addition to the house. In this case, the cost of the land is estimated using the comparable sales approach or some other suitable approach. The manufactured home is known as an improvement made on the land. From the cost of the improvements made on the land, the cost of depreciation of the manufactured home is subtracted and the resultant is added to the cost of the land.

Income Capitalization Approach: In this case, the value of the property is equal to the net operating income (NOI) divided by the capitalization rate. Specialized vendors provide the market capitalization rates for different types of properties located in an area. The NOI is calculated as follows:

NOI = Gross Rent – Vacancy Charges – Operating Expenses + Operating Income

The relationship between the Capitalization Rate, the NOI and the Fair Market Value (FMV) of the property is as follows:

FMV of the property = NOI / Capitalization Rate

Hence, on dividing the NOI by the Capitalization Rate, one arrives at the FMV of the property.

Since Fannie Mae and Freddie Mac have introduced additional requirements for appraisals, it would behoove the appraisers to consider supplemental certifications to update their knowledge regarding the appraisal of manufactured homes.