Appraising is both an art and a science. As such, the outcome of an appraisal is often unpredictable. When appraisal’s don’t go their way, buyer’s easily frustrate. Why did the appraiser’s valuecome in low? Why did the appraiser require a certain repair? How did they miss the superhighway of termite tubes on the living room wall?
How Appraisers Miss Home Value?
In order to understand how they miss value, it helps to see how appraisers derive value. Appraisers look at a many factors to calculate a home’s value. For example:
- Size of the home
- Home upgrades
- Landscaping/pool features
- Overall quality of home
- Overall condition of home
- Location of home
- Comparable sales data
The above is of course a lender perspective. An appraiser would generate one that is much longer. Scanning over these 8 items you’ll see a lot goes into determining a home’s worth.
Ultimately, home value comes from comparable homes sales data in the subject homes immediate area. However, this part of the appraisal process is very subjective. One appraiser often gives more weight to an upgrade, condition or feature than the next appraiser. Oftentimes, appraisers use different comparable sales than a Real Estate Agent. This too impacts the value.
Arguing an Appraiser’s Value
While the appraiser’s value is final, it is arguable. A “rebuttal” allows buyer/seller to argue their case with an appraiser regarding value. VA loan appraisals allow a rebuttal feature that is unique. This different process known as the Tidewater accomplishes the same thing. Either way, rebuttals and tidewaters have a low success rate. However, when buyer/seller disagree the appraiser’s value a rebuttal makes sense. Jim Carey said it best “so you’re saying there’s a chance”. You recall what kind of odds he was dealing with? Well, rebuttals are not much better.
Required Repairs on an Appraisal
The subject of “required repairs” is two-fold when it comes to disagreeing with an appraiser.
- Appraiser requires repairs that buyer and/or seller disagree with
- The appraiser did not require repairs buyer and/or seller think should be
Most loan types have property related requirements based on subjective standards. When appraisers spot something during their inspection that violates a property requirement, they mark it as a required repair. However, appraisers and buyer/sellers can disagree on required repairs.
For example, an appraiser inspects a home and notices a section of stone walkway is a higher than the others. Due to the appraiser seeing the stone as a trip hazard, they require it be leveled. On the flip side, the buyers and/or sellers may never have noticed the uneven tile before. To make it more fun, a different appraiser may not have noticed the tile.
Appraising is an Art form
In conclusion, appraising is an art form. Sometimes the appraiser paints a masterpiece. Other times, its a kindergartner style family portrait. While their report may not make everyone happy, understanding their opinion of value and property condition.
By Jeremy House