5 Common Appraisal Questions Answered

This article was originally posted on DWSlaterCo on February 07, 2018


Even though it is still winter and it is a bit icy outside as I type, it appears that the market activity in our area has already started to heat up. As we get ready for the busy spring selling season, I thought it would be a good time to go over some of the more common questions about real estate appraisals.

1. What is a real estate appraisal and how does it work?

Simply put, a real estate appraisal is an opinion of value performed by a professional appraiser. Real estate appraisers are qualified, licensed and trained in the process of appraising real estate. Not all appraisers have the same license and qualifications. You can read more here about the qualifications of an appraiser.

If you are buying a home and need to take out a mortgage for the purchase of the home, your lender will most likely order an appraisal to be done. This will also apply if you are refinancing your home. The lender needs to know the value of the collateral. Each lender will have their own guidelines as to the selection of the appraiser and requirements of the appraisal.

Once the appraisal is ordered, the appraiser will schedule a time to come and view the property. The time this will take varies depending on the size and scope of the property being appraised. After, the appraiser observes the property he or she will then complete their analysis, a part of which includes finding sales of other homes similar to the property.

The appraiser goes through a process of developing an opinion of value. Once that opinion is made it is presented and supported in an appraisal report. This report will be sent to the lender. For a more detailed explanation of the process, you can read more here.

2. Who owns the appraisal?

This is an often misunderstood concept. In most cases, if an appraisal has been ordered as a part of a loan process, the appraisal is owned by the lender and not the homeowner or homebuyer. It can be confusing, as the borrower pays for the appraisal as a part of the loan application process.

Exceptions to this are when a homeowner orders an appraisal for their own private use. An example of this would be a homeowner wants to sell their home but want to know what it is worth. If the property is complex or difficult to determine the value, the homeowner may decide to order an appraisal in order to establish a list price. In this case, the homeowner does own the appraisal. Note, this pre-list appraisal would not be able to be used for a loan. This would be a different assignment. For more information about this, I recommend looking here.

3. Why does it take so long to get the appraisal back?

Consumer Home ValueOne of our most-read blog posts has this title found here, thus it must be an issue and concern. We absolutely understand the time pressures of having the appraisal back, we understand trying to get everything in by a closing date, or before you lose the lock on your mortgage rate.

What you need is a quality report as quickly as possible. There are a few things that cause delays. Sometimes there are scheduling delays. Things such as weather (ice, storms, flooding) impacting travel or the homeowner’s schedule which can cause delays.

Delays in the process of ordering. If an appraisal management company (AMC) is used to place the order sometimes it may be a week from the time the appraisal is requested and when it is actually assigned to the appraiser. The AMC may have spent time getting quotes from appraisers. We have placed quotes with AMCs only to have the appraisal assigned a week later. Also, there may be delays in the AMC system. Just this week, we had issues where we completed an assignment and uploaded it to the AMC portal. The next day, the AMC informed us that the upload did not go through. We reprocessed the report, uploaded and then the next day we were informed that the report was hung up in their system. We ended up directly emailing it. The next day, we heard back from the AMC with a few items needed clarification once they were able to open the report. We addressed it, uploaded and then heard back from the AMC the next day that the upload was hung up again in their system! This now four days from when the report was completed!

Lastly, another reason for delays is that appraisers may just have a full workload, we sometimes get slammed with many requests at once. This does NOT mean there is a shortage of appraisers but just that sometimes all of the work seems to come at once. To read more about this topic go here.

4. How does zoning impact my property?

Our blog post on this issue has also been a popular post. Many may have concerns about the zoning of a property and its impact on values. The way that zoning will impact a property has to do with the highest and best use of real estate. As a part of the appraisal process, an appraiser will determine the highest and best use of a property. The highest and best use of a property is it’s physically possible, legally permissible, financially feasible and maximally profitable use.

We just completed an appraisal of a property that was a residence. It was surrounded on three sides with commercial properties and was zoned commercial. We contacted the city and confirmed that it was a legal non-conforming use as residential however if the property was destroyed by fire it could not be rebuilt as a residence. We reported this as many lenders will not lend on a property that cannot be rebuilt. There are many other examples of how zoning can impact the value of real estate. You can read more here.

5. What do I need to do to prepare for the appraiser’s visit?

The appraiser has called and scheduled an appointment to view the property. What is the best way to prepare? Do I need to have the house clean? We recommend having a list of information about the property available to the appraiser, such as any updates, renovations, repairs, etc that have been done. Here is a link to a form we use. As far as having the house clean- know that appraisers are going to look in all rooms of the house. We will be noting the elements such as flooring, walls, fixtures, built-in cabinetry, etc along with their condition. You do want to show us all that is special about your property. We do NOT recommend that you delay the process by waiting until you have everything spotless but we do recommend that you have your house ready for us to be able to observe all areas of the house. Read more here for visual examples of a house ready for us.

Consumer Home Value

These are just a few of the common questions that we often get. What did I leave out? What questions do you have? We would love to address. Please comment on this blog or contact us at www.dwslaterco.com.

Shannon Slater

Shannon Slater is a Certified Residential Real Estate Appraiser with the DW Slater Company which provides appraisal services to the Dallas-Fort Worth area and its northern counties. She joined her husband David at the DW Slater Company in 2006 and has now been appraising for 12 years. Shannon is a designated member of the National Association of Appraisers and a member of the Association of Texas Appraisers. She writes for the DW Slater Appraisal Blog– a blog about real estate appraisals and appraising.

Recent Content