Home Appraisal Values
Home appraisal values have experienced a decline from values a couple of years ago. Many lenders have moved to national appraisal companies in an effort to bring consistency to home appraisal values. Here’s some helpful advice on residential appraisals and things to keep in mind.
Evaluation tips:
It’s important to remember that if the property is overbuilt for the area – unique in size, number of rooms, or other unique factors – simply adjusting it to work is not allowed. Similar compositions are the key to allowable adjustments. In addition to the compositions being similar in aesthetics, they must be in reasonable proximity depending on the area.
Suburban and urban properties must have comps within one mile or less of the subject property. Offsets coming from the other side of a main road or from another city are difficult to validate.
Net/gross adjustments for compositions must not exceed 15%. In some cases, larger adjustments may work based on the appraiser’s notes and reasoning. Line adjustments must not exceed 10% of the sale price. Again, appraisers can slightly exceed 10% with proper explanation.
KEY POINTS OF THE EVALUATION
Page 1 of the Appraisal
market decline
on offer
Time to market of more than 6 months
this is normally not acceptable.
*Prevailing value appraised value for market area
· The appraiser should comment on the effect it would have on the item.
*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) Compass distance
Urban: must be ½ mile or less
Suburban: 1 mile or less (may be a little longer depending on the area)
Rural – less than 10 miles
2) Line item adjustments greater than 10%
3) Net/gross adjustments greater than 15/25%
Excessive adjustments show that you really do not have a comparable property
4) General settings in compositions
if all compositions have a setting, such as for a swimming pool, this is not acceptable.
· must have a composition(s) that supports item settings (i.e. pool, no garage, unit/fixture rooms, workshops, etc…)
5) The appraised value must be in parentheses for the comps
if you have 3 bars with set values that are too far apart, this is not acceptable.
the value cannot be based on the comps in the list. List comps are to back the value.
the value cannot be above the set values of the comps
All Appraisals must contain the following:
*1004MC or DU/LP (Automated Subscription Engines) charging rate allows reduced charging rates. However, they are not allowed on: Cashout, New Construction, Loans that require mortgage insurance.
1) The annex page must show the Remaining Economic Life.
2) The signature of the Assessor must be present.
3) The sketch page must be present.
4) The location map is key for the subscriber to determine the neighborhood.
5) Photos (front, back, street view, interior photos, courtesy photos)
6) flood map
Mortgage loan values depend on neighborhood factors, as well as the appraiser’s ability to find comparables within a reasonable distance that have sold in a reasonable amount of time. The days when underwriters simply allow higher home loan values on a particular property because the property is at home loan value can be a source of much frustration for a prospective homebuyer. However, a proper technical evaluation can simplify the process. For more information on home loan values, key appraisal points, or residential financing, visit the caltexfunding resource site and search for Brandi Horton’s resource.
