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A good appraisal is good for all: Buyer, seller, agent


A good appraisal is good for all: Buyer, seller, agent

By KERRI BARTLETT
For Brentwood Home Page
The two delicately intertwined worlds of selling real estate and appraising real estate can sometimes seem worlds apart.

“It’s important for Realtors and appraisers to understand each other because they are both involved in working with clients during a transaction,” explained Tiffany Cheuvront, WCAR Executive Vice President at a recent association seminar that brought both groups together.

Though the “How to Avoid Appraisal Pitfalls” discussion was geared to the related professions, sellers and buyers can also benefit from understanding how the process works.

Preparing for an appraisal and understanding what aspects of it will affect their home’s value are important for both Sellers and their Realtors said the professionals who participated in the WCAR panel: Murray Huber of Huber and Lamb Appraisal Group, James Atwood of James B. Atwood Appraisals, Richard Exton of Manier and Exton Real Estate Appraisers and Joyce Deason of Joyce Deason and Associates.

Winterizing your home
can add to its value … and save you money now

The Appraisal Institute, the nation’s largest professional association of real estate appraisers, urges homeowners to consider winterizing their properties to potentially lower energy costs, increase comfort in cold months and possibly improve resale value.

“This is the perfect time for consumers to consider making seasonal updates to their homes,” said institute president Sara W. Stephens, MAI. “Not only do these types of home improvements enhance living environments in winter months and possibly lower energy costs, but most can provide an above average return on investment in resale value.”

Windows

Adding energy-efficient vinyl windows to the home can have an average payback of more than 69 percent, according to the 2011–12 Cost vs. Value Report, published by Hanley Wood. Vinyl replacement windows offer a higher return on investment than wood replacement windows and also have a higher projected return on investment than many other home improvement projects, including a kitchen or bath remodel, addition of a master suite or new bathroom, or a roof replacement.

Replacement windows also can be especially valuable to homes built before 1978, due to the importance of reducing lead-based paint in older homes, according to the Hanley Wood research.

That same study found exterior replacement projects retained the most value in home improvements. For example, updating and replacing fiber-cement siding returned 78 percent of homeowners’ original investment.

Heat

A furnace doesn’t just provide heat and comfort during cold months, but proactively tuning or replacing a home’s furnace can alleviate issues when considering resale. According to Consumer Reports, the average lifespan of a furnace is 15 to 18 years. Homeowners should keep this timeframe in mind when debating servicing versus replacement.

Maintenance

Homeowners should also consider other projects to see an immediate saving in their energy bills.

  • Clean the gutters – Remove leaves and debris so rain and melting snow can drain, preventing backed up water or ice that can clog drains and allow water to seep into the house.
  • Add insulation – Most homes need a minimum of 12 inches of insulation in the attic, regardless of climate conditions. If ceiling joists are visible, the insulation needs to be beefed up because these are typically 10 to 11 inches.
  • Check the ducts – Ensure ducts are not exposed and are well-connected. Otherwise, homes with central heating can lose up to 60 percent of heated air before it reaches the vents, according to the U.S. Department of Energy. Homeowners should also check for gaps and pinches in pipes and repair them to make sure heated air flows easily into the home.
  • Tune the furnace – Clean and tune a furnace annually to increase efficiency and the life of the furnace. Check the furnace now to make sure it does not produce a smell, which will require attention before continuous running in the winter.

For additional information on home improvements that can be made throughout the year, see the Appraisal Institute’s Home Improvement Tips fact sheet.

Preparing for an appraisal

Preparing for an appraisal and understanding what aspects of it will affect their home’s value are important for both Sellers and their Realtors said the professionals who participated in the WCAR panel: Murray Huber of Huber and Lamb Appraisal Group, James Atwood of James B. Atwood Appraisals, Richard Exton of Manier and Exton Real Estate Appraisers and Joyce Deason of Joyce Deason and Associates.

When preparing for an appraisal, Realtors should “tell sellers that the final buyer is coming to look at their home. The home should look the best that it will ever look and give the best presentation possible when the appraiser arrives.”

While the most objective and significant features that affect a home’s value are lot size, building size, the size and number of bedrooms and bathrooms, and garage size, more subjective aspects such as a home’s overall quality and condition can influence the value of key areas in a home.

Updating or renovating significant areas such as the kitchen, bathrooms, and master bedroom yield the most financial returns, the panelists agreed. However, they added that in some cases, sellers can over-improve their home out of a return investment. For example, if a seller renovates a kitchen for $50,000 in a neighborhood that does not support the value, sellers will not increase the value of their home and will not receive a significant return. Small updates can make a big difference, they said.

“Care and maintenance can go a long way,” said Exton, the featured speaker.  “A few small expenses instead of a $50,000 remodel can impact the value of a home.” Fresh paint, curb appeal as in light landscaping, and an overall clean, well-maintained home that’s pristine in appearance will boost the appraisal value. “If a home is poorly maintained on the surface, you wonder what’s behind it,” Exton said. “If the owners are not taking care of the little things, you wonder if the big things are being taken care of.”

Do your homework

The panelists agreed that Realtors should do their homework about a property before an appraisal. Appraisals are data driven, the panel explained. “We are data wonks. The more information, the better. That’s our business,” Exton said.

Two ways Realtors can ensure a successful outcome of the appraisal process and end result of the transaction are:

Do research before putting home on the market. What information was compiled to achieve the price point? Market data? Home features? Location?

Provide factual information about the home such as dates of heavy renovations (repairs to structure of the home down to the studs) or the extent of updates such as replacing countertops and cabinets. Any repairs to interior or exterior of home such as roof or HVAC should also be considered and reported.

The panel emphasized that an appraiser is required to remain independent during the appraisal process; they cannot be influenced by a bank or Realtor in determining the value of a property.

It is also a myth that the appraiser cannot communicate at all with the Realtor during the process, according to the panel. Both parties are free to communicate, but the appraiser should always remain free of bias regarding a property’s value.

“The most important thing that Realtors can take away is to provide accurate and detailed information for appraisers. Our habits are different, and it’s important to be aware of and follow guidelines,” Realtor Chip Kerr of Crye-Leike Realtors and a director on the WCAR Board of Directors said. 

Exton agreed.

“Usually, agents only interact with appraisers during inspection or over the phone. It’s nice to put a face with a name because we are in this together, tied hand in hand,” he said.

For more information, the legal criteria for appraisals can be viewed at efannymae.com or hud.gov.

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