Having an idea in what is involved in appraising a piece of property can greatly help in maximizing the appraised value and avoiding costly details and re-inspections. The Florida appraisal process consists of several steps.
The following are the major steps in the sequence normally followed by appraisers:
• Research the subject property as to size, bedrooms, baths, year built, lot size and square footage.
• Gather data of recent sales in the subject’s neighborhood. The appraiser needs to locate at least 3 and preferably similar-sized homes that have sold and closed escrow in the neighborhood. The homes need to be within one mile of the subject and sold within the past six months. These homes are considered the “Comparable Properties” or “Comps” for short. Field inspection consists of two parts: first the inspection of the subject property, and second, the exterior inspection of the comparable properties which have been selected to estimate the value of the subject property.
• The subject inspection consists of taking photos of the street scene, front of the home and rear of the home, which may include portions of the yard. The appraiser will make an interior inspection for condition, noting any items that would detract from or add to the value of your home. He will also draw a floor plan of the home while doing the inspection.
The inspection of the comparable properties is limited to an exterior inspection. For features which cannot be seen from the street, the Florida appraiser has reports from Multiple Listing Services (MLS), California Market Data Cooperative (CMDC), county public records, and appraisal files along with other sources to help determine the condition and amenities of the comparable. After the field inspection has been completed, the appraiser must determine which comparable properties most resemble the subject, making slight adjustments in value for any differences between them. After making the required adjustments, the appraiser must go through the reconciliation process with the three comparable properties to determine a Final estimated value. This method of estimated value is called the “Direct Sales Comparison Approach to Value”, and it accounts for nearly all of the considerations in determining value of single family property.
It is important to consider that the appraiser will be taking photos of the street scene and of the front of the subject. The street scene gives the lenders some kind of idea as to the type of neighborhood in which the home is located. The photo of the front of the home gives the lender an idea of its condition and its curb appeal. And lastly, a photo of the back of the home and part of the rear yard is taken. Many homeowners don’t take care of the rear portion of their homes and back yards, so for this reason the rear photo is required.
In most cases, (over 90% of the time) what you see in the condition of an exterior home will be repeated almost exactly in the interior. So one of the most important things you can do is enhance the value or perceived value is to improve the curb appeal of your home.
An appraiser will call in advance to set up an appointment to inspect your home. At that time, offer to supply any information about the home size, number of bedrooms, bathrooms, pool, enclosed patio, etc. The more that is known about the property prior to inspection, the better the appraiser can focus on researching the most similar comparable. “Doing your homework” will maximize your chances of having a good appraisal. While your home is being inspected, don’t follow the appraiser from room to room causing distraction. Instead, allow the inspection to go smoothly. In case the appraiser has any questions, be close by to answer them. The time to mention the things you think are important is either before or just after the inspection.
An appraisal is one of the few upfront costs for home owners when financing the home. Appraisers are normally paid at the door at the time of service. Appraisal costs can range from $275-$400 depending on the type of loan and the subject property. Often mobile homes or FHA loans for example can cost more than traditional single family residences and conventional financing appraisals.