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If you’ve ever tried to ask an appraiser any questions while they’re at your house you might agree that we can be a little tight lipped about certain things. Not that we won’t answer any questions about the appraisal process and exactly what we’re looking for during the inspection, but beyond that there are certain things we are not at privilege to discuss. Today I thought I would not only tell you three questions an appraiser will not answer, but I also want to explain to you why.
What do you think my house is worth?
During the appraisal inspection the main objective for the appraiser is to collect all the physical data about your property. I’ve written in the past about exactly what appraisers look for during the inspection so I won’t focus on that here, but I will say that this is only the beginning of the process. At this point the appraiser has no idea what your home may be worth because we still have to research sales and perform market analysis.
It’s not that we don’t want to tell you what your home is worth but because we haven’t completed all of the analysis it wouldn’t be fair to guess. We are sometimes able to do research before we go to your home to see if there has been any sales activity in your neighborhood but it’s really not enough to give you a value. In addition, if we are doing the appraisal for a bank or mortgage company we are also subject to appraiser-client privilege, meaning that since we were hired by the lender they are our client and they are the only one we can communicate with about the value. The best thing for you to do would be to wait until we have finished the report and submitted it to our client, then you can get the value from them.
How big is my house?
To be honest, this is not information that we can’t give to you, however it’s usually not possible to do quick calculations and provide accurate square footage on the spot unless the appraiser does their sketch on a mobile device like some do. Either way this information is included in the appraisal report after we sketch out your home using a software program that calculates square footage area. When most people ask how much square footage their home has they usually want to know what the total area is, and more specifically how much is heated and cooled.
When performing an appraisal the appraiser has to list the above grade area separately from the below grade, or basement area. Most people think that they are not getting credit for this area because of this but that is not the case. In a previous post I explained how basement area contributes value at a different rate than above grade area so it is not a good idea to combine the two. Whenever we compare your home to others we look at them the same way so that we are comparing apples to apples and can provide you with the most accurate estimate or opinion of value.
How much are you getting paid for this appraisal?
If you hire an appraiser directly this will not even be a question you’re concerned about, however if you are getting a mortgage for a refinance or a home purchase you may find yourself in this situation. Before the introduction of Appraisal Management Companies (AMC’s) several years ago the appraisal fee was pretty straight forward, however after AMC’s got involved the fee to the homeowner has increased. This is not because the appraiser is making more money, it is however the result of the cost of the management company being added to the overall fee. In fact many AMC’s are charging more for the appraisal and paying the appraiser less, which doesn’t make sense.
Appraisers are typically not at liberty to disclose the fee to the homeowner because there could be a misunderstanding or confusion as to why they were told one fee and the appraiser quoted another fee. Just keep in mind that if you have a question about the fee it should be directed to your loan officer or other contact person that you’re working with and they can fill you in on what all the fees are for.
Conclusion
I hope I have shed some light on three topics that may have confused you in the past. Have I left anything out? Is there something else you may have asked your appraiser that they were not able to answer? Please leave your question or comment below and I’ll do my best to answer it for you.
This article was originally published HERE for more articles from Tom Horn you can visit birminghamappraisalblog.com
If you have any comments or would like to submit content of your own email comments@appraisalbuzz.com
Good info. But how many borrowers read the Appraisal Buzz?
Good question, but they may end up here if they do a Google search about appraisal fees, or what appraisers are able to talk about, etc.
True
DUMB, the AMC Fees should be a % of the Appraisers fee. Lets say the
Appraiser charges $450 and the % for an AMC is 35%. Then the AMC fee
would be $157.50.
The total fee to the borrower would than be $607.50
What
do I see today as an Appraiser? Well, I get asked all the time what my
fee is by the home owner or the borrower or his agent. I tell them I
can’t talk about my fee, even as the basic fee is $450. They tell me
that the bank collected $975 to $1,100.
WOW, I do all the work and I get $450
The AMC makes some phone calls to find an appraiser and does almost nothing more and they are pulling in $525 to $650
Then
they cry if it takes more that 2 days on my end, even if it requires
extra trips to look on old microfilm to look up permits and other needed
data
And all this was put in place to help the system and the borrowers?
I
hate to think what the owners of the mountain property I did last month
paid for the report I completed. My fee along was $850, so what did the
AMC add on to that one?
And now the AMCs attempt to tell us
HOW TO WRITE A REPORT
WHAT WORDS TO INCLUDE IN THE REPORT
WHAT VALUES TO REACH FOR THE FINAL VALUE (yup, just last month)
WHAT TO TAKE OUT OF OUR REPORTS
We can do without the AMCs, all they do is create costs and problems that
we don’t need in the system
I generally tell the homeowner or realtor what my fee is when ever asked. I think it’s part of the disclosure? Right