Big Bear Appraisal Blog

It’s rare to get a dollar back in value for every dollar spent remodeling and updating your home.  Some expenditures return more than others.  Published reports indicate an average return on bathroom remodels at 68% and kitchen remodeling typically only returns 46% of the cost.  Of course, these are National averages and local research is recommended. Remember, real estate value is about what buyers are willing to pay for something – not the cost.  An owner may have spent $50,000 on updating their weekend cabin, but what are buyers paying for similar remodeled homes in the neighborhood?  That’s what appraisers will focus on when coming up with a value.  It always comes back to the comps. 

Example of possible loss of value:  Walk-in bathtubs are promoted for ease of access for older and/or disabled people and the total purchase and installation costs may range from $5000 to $15,000 or more.  When it’s time to sell, many buyers may view it as a negative, and discount the purchase price, because it is something they will replace.  Perhaps a curbless or roll-in shower would be a better choice.

When upgrading a home for value, make sure it’s something that will meet market expectations and not just for your own satisfaction.  Of course, some remodeling is for the homeowner’s needs and not expected to give a dollar for dollar return.    A pool will certainly be worth less than the cost to build, but a family will likely get years of enjoyment from it.

People should realize that they rarely get 100% of the cost of remodeling and upgrades back when it comes time to sell.  There are exceptions, house flippers are professionals, have a team of craftsmen to do the work, have researched the market and know where their money is best spent to will yield the highest return. 

My suggestion to most people who are planning to sell soon and are considering significant remodeling, is to perform inexpensive cosmetic and deferred maintenance work, and leave the expensive updating to the next owner.

Allowing the seller to set the list price – While a list price set by the seller will make them feel good, it may prevent them from selling the home in a reasonable amount of time.  The list price should be a reflection of the market, taking into consideration recent sales and current competitive listings.

1. Inaccurate Square Footage – Incorrect square footages of living area come from public records, property owners and old MLS information.  If you are concerned, there is no substitute for due diligence, which includes measuring the home and checking on permits.
2. Using Only Price Per Square Foot – Price per square foot is less accurate in resort areas, because there are so many variables (lot size, view, age, quality, condition, etc) all lumped together.  Recent sales of comps are the most reliable indicators of market value.  A larger home will sell for less per square foot than a smaller home if everything else is the same. 
3. Not Using Realistic Comparables -  The test of a realistic comp is “would a potential buyer also consider it, if the subject were not available?” A comparable sale should be similar in neighborhood & lot size, age, style, appeal, bedroom/bath count and living area.
4. Not Bracketing in Your CMA – Bracketing consists of using sales that are slightly inferior, similar and slightly superior to the subject property.  If you make positive adjustments to the inferior sales, and negative adjustments to the superior ones, it should provide a tight range of value.
5. Not Getting a Pre-Listing Appraisal – While not necessary in every case, a pre-listing appraisal can be useful when you have a unique property.  Perhaps there is nothing like it in the neighborhood, there are no recent sales from the subject tract, or there is a question about the actual square footage.

A pre-listing appraisal can help you price a home to the market so that it can sell as quickly as possible and for the highest amount that is supported by the market.

Yes, quality is one of the many variables considered in the appraisal of a home, along with condition, effective age, appeal, design, etc.  Not only the quality of the home being appraised, but also the quality or lack of in the sales comps used in the appraisal.

When a lack of quality or a need for improvements is observed, as an appraiser, I will make a list of deficient issues and what it will cost to repair them.  This cost to cure is then utilized as an adjustment in arriving at an “as is” current market value for the home being appraised.  In my experience buyers do this when making a purchase.   A home might technically be remodeled, but if the work is sub-standard or obviously “do it yourself”, it may not compete with professionally remodeled homes.  When something looks off in a house, it’s a red flag to look at other details more closely.

Buyers are sometimes influenced by flashy ornamentation.  While we may not agree with it, if buyers are paying more for these shiny features rather than something older and so-called better, it is our job as appraisers to recognize the market reaction and take that into consideration in our value.

Log style and Historic homes are also a consideration.  Buyers may pay 15% more for a log style design compared to more conventional construction.  Historic homes like those built by Gus Maltby, in Big Bear, during the 30s and 40s have a mountain charm that many buyers pay a premium for and appreciate.

One last point worth mentioning has to do with quality issues that are below the surface, like 2 x 6 framing, extra insulation, plumbing and electrical updates, extended life roofing, energy, fire and seismic upgrades beyond current building codes, etc.  In order to determine if buyers are paying more for these upgrades, it is necessary to extensively research the market data rather than make our own assumptions about what the market should and shouldn’t do.

While it is difficult to put a dollar figure on differences in quality, there typically is a range of value of the adjusted market data.  The recognition of a high quality home being appraised is a good justification for favoring the higher end of the value range. 

In the final analysis, whether it’s logical or not, it’s the market that gives value and the appraiser is there to reflect the market reaction and take that into consideration in the appraisal.

Zillow is one of the most popular websites for real estate information.  You can enter an address and get an estimate of the home's value called a "Zestimate".  These computer generated value opinions are often taken as gospel and are regularly quoted to real estate agents by buyers to challenge high asking prices and sellers to question low listing prices. 

The problem is, the Zestimates are not always accurate, and in resort areas like Big Bear, where every street and house is different, the margin of error can be large.  Zillow uses a computer program to determine the value of a home based on information from public records, which are notorious for being inaccurate, and information entered by users, which may be biased.  It doesn't know the idiosyncrasies of a real estate market , not to mention recent remodeling and updates, interior condition, level of quality and charm, view or proximity to recreational attractions and shopping.  It doesn't know about road noise and traffic, or structural problems and deferred maintenance.  As stated in the fine print on the Zillow website "it is a starting point in determining a home's value and is not an official appraisal".  The Zillow help center goes on to state: "We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as:  getting a comparative market analysis (CMA) from a real estate agent, and getting an appraisal from a professional appraiser..." 

Case Studies:

I reviewed the recent sale prices of 3 randomly selected 3 bedroom, 2 bath homes, and compared them to the Zestimate and range of value offered by Zillow:

  Sale #1 from Big Bear City sold for $360,000 while the Zestimate was $337,267 and the Zillow range of value $310,354 to $354,000

Sale #2 from Big Bear Lake sold for $193,000 with a Zestimate of $239,709 and the range of value $194,000 to $283,000

Sale #3 from Big Bear Lake sold for 693,000 with a Zestimate of $786,638 and value range of $747,000 to $826,000.                                 

In these examples, the sale price fell outside of the Zillow range with a large difference in the Zestimate and final sale price. 

There are studies that demonstrate that Zillow can be reasonably accurate on the value of a home in conforming tract developments.

However, in a resort area like Big Bear, where you have old and new, large and small homes mixed together, the accuracy can go way down.  Pricing a home properly is an art and science.  It is not accomplished by trusting a computer generated value whether it is Zillow or some other online valuation tool. 

 If you want an accurate value of your home, always consult with a local real estate professional or competent appraiser.

Why Doesn't a Big Bear Appraiser Use Price Per Square Foot to Determine Value?

"What is the price per sq ft?"  I get this question often from realtors and homeowners.  Because this is a common method of comparison, I thought I would explain how appraisers view this approach to value.

The price per sq ft is the most familiar method of comparison that many people are aware of.   Remember that everything about the property is summed up in the price per sf, including the lot size, view, age, quality, condition, and other features, all lumped together into a price per sf.  Because of this, it is important to select sales that are very similar to the home you are appraising and from the same neighborhood.

If you have a home with a 2 car garage, or a larger lot size, or superior view and are comparing it to a home with none of these features, the accuracy of your estimate will be reduced.  This is also true if you look at a home that is significantly larger than yours, even though all other features are equal, because a larger home will typically sell for less per sf.  This is the principle of diminishing returns that states the more square footage you add the less value you get for the extra area.

Homes in Big Bear were individually built on vacant lots from back in the 1920's to the present.  You have large and small, old and new, custom and basic construction mixed together within the same tract or neighborhood.  As a result, the price per sq ft method of valuation is unreliable.  The exception to this is the Maple Ridge tract across from the Big Bear High School, because these are similar in age, lot size, only a limited number of models exist and the design and features are very similar.  There are variables, primarily limited to upgrades of exterior siding and interior finish work.  This area is one of the few in Big Bear, that is similar to tract housing, found down the hill. 

Price per sq ft may be a good indicator of value for tract housing.  Appraisers however, are required by lenders to select recent sales "comps", in close proximity to the house being appraised, with as many similarities as possible.  Instead of calculating price per sq ft for these comps, lenders require that each sale be adjusted for differences, including, lot size, view, quality of construction, condition of improvements, bedroom/bath count, living area, garages, etc.  The appraiser is required to be geographically competent and to have researched the area regarding market reaction (how buyers react) to these differences and make adjustments accordingly.

Pre-Listing Appraisals A Good Idea in Big Bear

If you’re working with a realtor to list your property, most likely they will provide you with a CMA (comparative market analysis) that identifies recent comparable closed sales, properties in escrow, current listings and expired listings.  This is an important step in getting the most for your property at sale and minimizing the home’s time on the market.  A pre-listing appraisal can provide an “objective” third party opinion of value giving you confidence that you are listing your home at an appropriate price.

A pre-listing report will provide a full sketch showing the accurate square footage and may reveal inconsistencies with public records that can be explained or corrected before the sale.  In addition to providing you with a realistic list price, a pre-listing appraisal can be a valuable tool in negotiating with a potential buyer, and decrease the chances of unknown problems that cause sales to be delayed or fall through.

Some people are surprised to find out their home is worth more than they thought, others have an unrealistic opinion of the value.  A well priced listing attracts buyers and helps to sell in a timely manner.

When arriving at a list price, it’s important to compare your home to what has recently sold and is currently listed in your neighborhood, because potential buyers will be making these comparisons.  Remember, why would someone buy your home if they could buy something similar for a lower price?

Get a Pre-Listing Appraisal in Big Bear if you have:

1. the largest or smallest home in the neighborhood, because if you take the average price per sq ft and multiply your living area, you will most likely over price a large home and under price a small home;

2. no comparable sales nearby, because an appraiser with local knowledge will know where to go, even if it is 1 or 2 miles away,  for properties similar to yours;

3. recently made extensive renovations, because most sellers will want to recoup the $50,000 in home improvements that they have made, and a professional appraisal will indicate what a buyer will pay for those improvements;

4. had your home on the market for a long time with no showings or offers, because there are many factors that go into a home being properly priced, a pre-listing appraisal will take into consideration, location, condition, and appeal as well as current market conditions.

When You Don’t Need a Pre-Listing Appraisal:

If your home is located in a neighborhood with homes of similar age, style and size, with lots of recent sales and current listings, then it is easier to estimate the value without an appraisal.      

Conclusion

Don’t let the fact that you are using a realtor prevent you from getting a pre-listing appraisal if the situation calls for it.  The cost of the report will be well worth the time saved in selling your home at the right price.  When making financial decisions as important as selling a home, it’s always a good idea to get as much information as possible, and from as many sources as possible. (except Zillow, see my next post coming soon).

There are hundreds of changes coming as a result of HUD Handbook 4000-1 which becomes effective September 14, 2015.  FHA's new operative words are OBSERVE (the property condition), ANALYZE (effect on marketability and value) and REPORT (observed condition and analysis).

The link below is for the full HUD Handbook:

http://portal.hud.gov/hudportal/documents/huddoc?id=40001hsgh.pdf 

The following brief discussion covers the changes and a couple of existing requirements  that will have the greatest impact on an appraisal inspection. 

**HUD 4000.1 contains several changes to the inspection protocol previously established for appraisers including, but not limited to, the following:

**The appraiser must state which of the utilities are on and in working order.

**The appraiser must operated and observe all built in cabinets and appliances to ensure they are in working order, this includes making sure all cabinets/drawers operate effectively, and includes, but is not limited to, observing the operation of the dishwasher, stove, oven, disposal, refrigerator, washer and dryer, when included in the sale.

**The appraiser must operate and observe the plumbing system to ensure no foul odors are emitted and the water pressure is sufficient,  this includes, running faucets while the toilet is flushed.

**The appraiser must observe the crawl space and attic areas in their entirety to look for and report structural issues, roof leaks, vermin infestation, crawl space venting and minimum clearance on 18 inches, trash and debris.

**If the property has a shared well, the appraiser must obtain a shared well agreement and include it in the appraisal report.

**Defective lead based paint must be corrected for all properties built prior to January 1, 1979.  this is a change from the previous "prior to 1978" rule.

**Operate a representative number of windows, lighting fixtures, switches and receptacles inside the house, garage and on the exterior walls and note any deficiencies.

As you can see, the role of the appraiser in an FHA property inspection will now have more emphasis on identifying repair items, much like a home inspector does (although the HUD Handbook clearly states that the appraisal is not a substitute for a Home Inspection).  This is only a summary and in no way intended to be all inclusive of changes affecting property inspections for appraisal purposes.  Be aware that time will tell how impactful these changes will be on FHA appraising and lending.

COMPARABLE SELECTION & ADJUSTMENTS IN BIG BEAR

Comparable sales are selected utilizing the principle of substitution, which means that a knowledgeable buyer would not pay more for a property than he could purchase a substitute or equal property for. Sales comparables for appraisal purposes have as many similarities in time of sale, proximity of location, views, lot size, age, condition, gross living area, bedroom and bathroom count, garage size and updated and upgraded features. The question to ask yourself is: Would a knowledgeable buyer substitute these comparables for the subject property he is interested in, if it were no longer available?

BRACKET AS MANY OF THE VARIABLES AS POSSIBLE

LOT SIZE

Site adjustments are based on the differences of lot size between the subject and the sales. Adjustments applied are based on the contributory value of the added land, not the actual cost. A 2500 sf lot compared to a 5000 sf lot in Sugarloaf may require a $5000 to $15,000 adjustment where a 10.000 sf lot compared to a 15,000 sf lot in in Fox Farm may not require any adjustment.

VIEW

Adjustments for view may reflect various situations. Mountain views of Snow Summit or Bear Mountain are generally less valuable than lake views because the appeal for ski slope views is part of the year compared to year round for lake views. Being across the street from commercial property or locations on busy streets reflect negatively on a property due to increased traffic noise and decreased privacy.

AGE AND CONDITION

Combine adjustments for age and condition into a single condition adjustment. If the properties are unequal, how much discount would a buyer demand to purchase the lesser property. This sometimes would equal the cost to bring the lesser property up to the better property condition? The condition adjustment considers observable differences in actual and effective age and condition of the comparables and the subject with regard to routine and deferred maintenance. Are there updates to the kitchen, baths and living areas to meet current standards. Adjustments for replacement: carpeting, exterior and interior paint, roof, water heater and furnace are maintenance items, and not typically adjusted for as they are expected to be properly maintained by a typical buyer.

DESIGN AND QUALITY

Design and appeal adjustments reflect differences between home designs such as log style, Victorian, typical mountain design, gambrel, chalet, A frame, etc. An adjustment in this category may also be based on the market reaction to various front elevations, exterior siding and curb appeal. The construction quality adjustments recognize differences in architectural design, building construction materials and workmanship, and the amount and quality of exterior and interior finish.

BEDROOM AND BATH ROOM COUNT

Adjustments for bedroom and bathroom count reflect the market reaction of importance of these features. There may be little or no adjustment for a 2 bedroom home with a loft or den space compared to a 3 bedroom home, because these bonus areas could be used as additional sleeping areas.

GROSS LIVING AREA ( NO MORE THAN 25% LARGER OR SMALLER)

Gross living area adjustments are based on the differences in livable square footage. These adjustments may range from $30 to $100 per sf or more, depending on the design, quality and location of the dwelling. Generally, the typical buyer does not differentiate between homes that are within fifty square feet of each other and no adjustments are applied in this situation.

FUNCTIONAL UTILITY

Whether there are stairs to climb from the parking area or the house is below the grade of the street are also considerations. Is the floor plan chopped up or are there 4 bedrooms on the 2nd floor with only 1 bathroom.

UNPERMITTED AND GRANDFATHERED IMPROVEMENTS

A separate adjustment may be applied for rooms that have been converted from garages, finished without permit or are detached from the main house. The adjustments applied are based on the contributory value of the improvements, not the cost to construct. More and more lenders are requiring permits for living area to be included in an appraisal. When the living area of your subject property differs significantly from the public record living space, you need to research it further.

MAXIMUM ADJUSTMENT GUIDELINES ARE:

INDIVIDUAL 10% OF SALE PRICE

NET 15% OF SALE PRICE

GROSS (TOTAL) 25% OF SALE PRICE

EXPANDING THE MARKET RADIUS BEYOND 1 MILE CAN BE JUSTIFIED DUE TO THE CHARACTER OF BIG BEAR AS A RESORT AREA WITH IMPROVEMENTS OLD AND NEW, LARGE AND SMALL, AVERAGE AND CUSTOM QUALITY ALL MIXED TOGETHER.

EXPANDING MARKETING TIME BEYOND 6 MONTHS IS ALSO POSSIBLE IN RARE OCCASIONS WHEN THERE ARE AN INADEQUATE NUMBER OF RECENT SALES COMPARABLE TO THE SUBJECT (A $3 MILLION DOLLAR LAKEFRONT SALE WOULD BE AN EXAMPLE)

IF YOU HAVE UNIQUE CHARACTERISTICS LIKE VIEW, BUSY STREET FRONTAGE, CUSTOM QUALITY OR ANYTHING YOU WANT TO ADD OR SUBTRACT SUBSTANTIAL VALUE FOR, YOU NEED AT LEAST ONE COMPARABLE WITH A SIMILAR FEATURE. 

KEEP ASKING YOURSELF - WOULD A BUYER PAY MORE FOR THE DIFFERENCES IN THESE FEATURES, AND IF SO, HOW MUCH?

FHA PROPERTY INSPECTION CHECKLIST

FHA IS CONCERNED ABOUT 3 PRIMARY ISSUES REGARDING REAL PROPERTY:

SAFETY - PROTECT THE HEALTH & SAFETY OF THE OCCUPANTS

SECURITY - PROTECT THE SECURITY OF THE PROPERTY

SOUNDNESS - CORRECT PHYSICAL DEFICIENCIES OR CONDITIONS AFFECTING STRUCTURAL INTEGRITY

THE FOLLOWING ARE THE MOST COMMON FHA RELATED CALL BACKS AND REPAIRS I ENCOUNTER IN THE BIG BEAR AREA. 

LEAD BASE PAINT - HOUSES BUILT BEFORE 1978 - PEELING AND CHIPPING PAINT ON THE DWELLING EXTERIOR, INTERIOR, FENCES, AND OUTBUILDINGS MUST BE REMOVED AND THEN RE-PAINTED TO DEAL WITH POSSIBLE LEAD PAINT ISSUES.  BARE WOOD MUST BE PROTECTED FROM THE ELEMENTS NO MATTER WHEN THE HOUSE WAS BUILT.

ACCESS TO PHOTOGRAPH ATTIC AND CRAWL SPACES FOR "HEAD & SHOULDERS" INSPECTION IS REQUIRED.  WATER HEATER DOUBLE STRAPPING, CARBON MONOXIDE & SMOKE DETECTORS ARE REQUIRED AND WILL BE PHOTOGRAPHED.

ALL UTILITIES ARE TO BE ON AND APPRAISER INSPECTS OPERATION OF THE HOT WATER HEATER, PLUMBING FIXTURES, THE HEATING SYSTEM AND A REPRESENTATIVE NUMBER OF WINDOWS, LIGHTS AND ELECTRICAL OUTLETS.

A VISUAL INSPECTION OF THE ROOF FROM THE GROUND IS MADE TO DETERMINE IF A MINIMUM OF 2 YEARS LIFE EXPECTANCY REMAINS, AND IF IN DOUBT, A ROOF CERTIFICATION MAY BE REQUIRED.

HEALTH & SAFETY CONCERNS AND STRUCTURAL INADEQUACIES INCLUDING:  SIGNIFICANT FOUNDATION STEM WALL OR SLAB CRACKS, BROKEN DECK POST & PIERS, LOOSE DECK BOARDS OR STAIR TREADS WILL NEED TO BE REPAIRED.

ELECTRICAL SERVICE - NO FUSE BOXES OR EXPOSED WIRING ALLOWED

GRADING - NO STANDING WATER PROXIMATE TO DWELLING, GRADING SHOULD BE AWAY FROM STRUCTURE.

WELLS: MUST BE LOCATED AT LEAST 10 FT FROM THE PROPERTY LINE, 50 FT FROM A SEPTIC SYSTEM AND 100 FT FROM THE SEPTIC DRAIN FIELD.

MANUFACTURED HOMES REQUIRE AN ENGINEER'S CERTIFICATE ON THE FOUNDATION

NO LONGER REQUIRED

INSTALLATION OF A STOVE (THIS IS SOMETIMES REQUIRED BY INDIVIDUAL LENDER/INVESTORS)

BEDROOMS ARE NOT REQUIRED TO HAVE CLOSETS, BUT MUST HAVE PROPER EMERGENCY EGRESS

COSMETIC ISSUES NOT REQUIRING REPAIR INCLUDE - CRACKED WINDOWS, SOILED CARPET, WORN FLOORING OR COUNTER TOPS, MINOR DRYWALL DAMAGE, CRACKS IN DRYWALL, LEAKY FAUCETS

THIS CHECKLIST IS PROVIDED TO REALTORS AND HOME OWNERS IN BIG BEAR, TO ASSIST IN PREPARING PROPERTY FOR AN FHA APPRAISAL INSPECTION AND TO HELP AVOID RE-INSPECTION EXPENSE AND DELAYS.  THIS IS NOT INTENDED TO BE AN ALL-INCLUSIVE LIST AS INSPECTION REQUIREMENTS AND GUIDELINES ARE SUBJECT TO CHANGE FROM TIME TO TIME BY ACTION OF FHA/HUD. 

IS PUBLIC RECORD SQUARE FOOTAGE ACCURATE?

Lenders and Appraisal Management Companies (AMCs) assume that building square footage reported in tax records is permitted living space. The Public record information comes from Assessor records which indicate all of the improvements, known to the Assessor, whether permitted or non-permitted. Just because the public records reported by the title company indicate a certain square footage for your subject property, that does not guarantee that all or any of these improvements are permitted as living space.

In a recent national poll of appraisers conducted by Appraisalport, 5346 responded to the following question:

How accurate is the reported square footage from the tax records in your area?

- Very accurate for most homes - 16%

- Mostly accurate (about 3/4 of the time) - 46%

- Hit and miss (about 1/2 of the time) - 27%

- Not reliable (accurate less than 1/4 of the time) - 9%

- The tax records do not usually show the square footage in my area - 2%

The results indicate that in almost 40% of the geographic areas surveyed, public record data is inaccurate at least half of the time. In my opinion, the Big Bear Valley, which is comprised of:  Big Bear Lake, Big Bear City, Fawnskin and Sugarloaf, falls into the hit and miss category with some discrepancies in actual vs reported square footage noted in about 50% of the public records.

These discrepancies occur for a variety of reasons.

Individual appraisers measure improvements differently. In particular, upper floors with sloping ceilings and stairway spaces on multi floor dwellings are included by some and omitted by others.

Prior to the 1950's building records in the Big Bear area were not well maintained.

Some permitted additions have not been accurately added to the public record data, and occasional math errors contribute to inaccuracies.

In some cases, permits were issued but either expired or were never signed off on a final inspection. Some areas might have been permitted as storage space, and later finished by the owner as living area, but without the appropriate permits or inspections for livable space.

Getting finished areas approved by either the City of Big Bear Lake or the County of San Bernardino, after the fact, can be a difficult task often involving opening up walls to inspect plumbing and electrical systems.

it's a good idea to look at public record square footage with a skeptical eye. You may want to look deeper. Perhaps get a copy of a previous appraisal from the homeowner, but be careful, some appraisers "fudge" the dimensions to match public records in order to avoid Lender/AMC hassles. If you are concerned or have doubts, there is no substitute for due diligence. This would include measuring the home and checking on permits with either the City of Bear Lake or County building departments.

When an appraiser inspects your property for an appraisal he will look at the overall site, walk around the house, measure the exterior dimensions and take exterior pictures.  Then an interior inspection will be next with pictures in every room and notes regarding the physical characteristics, special features, upgrades and condition of the property.  The appraiser will be evaluating the quality of construction and condition of the improvements to see if it is at the upper, mid or low part of the range of houses found in your neighborhood.  Sales comparables are then chosen based on this evaluation.  It is extremely important for homeowners to be prepared as this is the one shot you have tke the best impression and achieve the highest value.  

1.  Cleanliness - Spruce the house up.  Sweep exterior walks, porches, and decks, vacuum the floors, tidy up the kitchen and bath areas.  Dirty carpeting, marks on the walls, and overgrown landscape affect value and are part of the overall condition rating.

2.  Repairs - Fix the things on your "Honey Do" list that have been piling up.  Touch up peeling paint, repair sagging fence and deck gates, replace missing handrails, leaky faucets, broken windows and drywall.

3.  Upgrades - Have a list of upgrades performed (especially kitchen and bathrooms) over the past 15 years and the approximate date completed. A list of the special features of the property that might not be obvious to the appraiser is also recommended. Have a copy of an old appraisal or better yet, the construction plans, if available.  The appraiser can double check his measurements and avoid a re-inspection to clear up inconsistencies.

4.  Sales Comparables - Don't worry about gathering a bunch of recent sales that come from the local MLS, this is the appraiser's job.  Information on "for sale by owner" transactions in your neighborhood could be helpful as the local MLS does not report these sales.  Also distressed sales and unusually high or low sales may have extenuating circumstances such as sales concessions to the buyer, or extremely good or poor quality and condition.  These circumstances may not be known to the appraiser and this information could explain this unusual sales data. 

 Let the appraiser do his job.  Give him a chance to make his tour and, once completed, this is the time to ask him questions and tell him about anything you think may have a positive impact on your property value.

Real estate appraisal reports are written for many purposes, and in most cases you may decide which appraiser to hire.

Buying and Refinancing a House

The most common reason for an appraisal is when you borrow money.  The lender making the loan in purchase and refinance transactions will want assurance that the property has adequate value to secure their loan.  Current lending law regulates the selection criteria for these appraisers and does not allow the borrower to pick the appraiser.

Trusts and Estates

The creation and management of trusts and estates often require appraisals to document the process and establish and modify the cost basis when a death occurs.  The appraiser is selected by the individual, his attorney or investment counselor.

Divorce and Partnership Dissolution

Appraisals are typically required when there is real estate to be divided or sold due to divorce or the end of a partnership.  Many times one party may wish to buy out another and an appraisal is used to establish the fair market value.  The appraiser is selected by one of the parties or their attorney.

Property Tax Appeal

Property tax appeals are often strengthened with a professional appraisal report.  With values having fluctuated significantly over the past few years, it's a good idea to review your assessed value and request a property tax reduction when warranted.  The appraiser is selected by the property owner.

Charitable Contributions and Gifts to Family

Appraisal reports document the value of charitable contributions where a tax deducution will be taken and gifts of real estate to relatives which may have gift tax implications.  The appraiser is selected by the individual, tax preparer or investment counselor.

Buyers and Sellers

Cash buyers who want a professional assessment of a properties value before closing escrow and sellers who want an unbiased opinion of market value to assist in establishing a listing price also obtain independent appraisal reports.  The appraiser is selected by the individual buyer or seller.

Written by,

Rick Hackney

Big Bear Appraisal Specialist

(909) 866-4225