Home Appraisal Values
Home appraisal values have seen a decline from the values of a couple years ago. Many lenders have moved to national appraisal companies in efforts to bring consistency to home appraisal values. Below, we are providing helpful tips in reference to residential appraisals and things you should keep in mind.
It’s important to remember if the property is overbuilt for the area: unique in size, bedroom count or other unique factors, its not allowable to simply adjust to make it work. Similar comps are the key to allowable adjustments. In addition to comps being similar in aesthetics they must be in reasonable proximity depending on the area.
Suburban and Urban properties should have comps within a mile or less of the subject property. Comps that come from the other side of a major highway or in another town are hard to validate.
Net/Gross adjustments for comps should not exceed 15%. In some cases larger adjustments may work depending on appraiser’s notes and reasoning. Line adjustments should not exceed 10% of the sales price. Again, appraisers may exceed the 10% slightly with appropriate explanation.
APPRAISAL KEY POINTS
Page 1 of the Appraisal
AÃ¯Â¿Â½ Over Supply
AÃ¯Â¿Â½ Marketing time over 6 months
AÃ¯Â¿Â½ this is typically not acceptable.
*Appraised value of the predominant value for the market area
AÃ¯Â¿Â½ the appraiser must comment on the affect it would have on the subject.
*Interior and Exterior materials must be in at least average condition – if they are in fair condition the item contributing to the “fair” condition must be repaired and brought to average condition.
Page 2 of the Appraisal
1) Distance of Comps
AÃ¯Â¿Â½ Urban – should be AÃ¯Â¿Â½ mile or less
AÃ¯Â¿Â½ Suburban – 1 mile or less (may be a little further depending on the area)
AÃ¯Â¿Â½ Rural – less than 10 miles
2)Line item adjustments over 10%
3)Net/Gross adjustments over 15/25%
AÃ¯Â¿Â½ Excessive adjustments show that you truly do not have a comparable property
4)Across the board adjustments on the comps
AÃ¯Â¿Â½ if all the comps have an adjustment such as for a pool, this is not acceptable.
AÃ¯Â¿Â½ you must have a comp(s) that supports the adjustments for an item (i.e. pool, no garage, accessory unit/quarters, workshops, etc…)
5)Appraised value must be bracketed by the comps
AÃ¯Â¿Â½ if you have 3 comps with adjusted values that are far apart – this is not acceptable.
AÃ¯Â¿Â½ the value cannot be based on listing comps. Listing comps are to support the value.
AÃ¯Â¿Â½ the value cannot be above the adjusted values of the comps
All Appraisals must contain the following:
*1004MC or appraisal type DU/LP(automated underwriting engines) allows reduced appraisal types. However, they are not allowed on: Cashout, New Construction, Loans requiring mortgage insurance.
1)The addendum page must show the Remaining Economic Life.
2)The Appraiser’s signature must be present.
3)Sketch Page must be present.
4)Location Map is key for the underwriter to determine neighborhood.
5)Photos (front, back, street view, interior photos, comp photos)
Home loan values are contingent on neighborhood factors as well as the appraiser’s ability to find comparables within a reasonable distance that have sold within a reasonable time frame. The days of underwriters simply allowing for higher home loan values on a particular property due to the property being in a Home loan values can be the source of much frustration for a potential homebuyer. However, proper appraisal technique can make the process simple. For more information regarding home loan values, appraisal key points, or residential financing go to the caltexfundingresource site and search Brandi Horton resource.