TBO.com - TBO is Tampa Bay Online

Crisis Has Changed Home Appraisal

ADVERTISEMENT

By ANGIE HICKS

Special to the Tribune

Published: September 25, 2008

Brian Dean wanted to add a pool to his 1967 home in Safety Harbor, so he checked with his lender about obtaining a home equity loan.

Before the bank would consider his request, it required Dean to get a new appraisal. He had an appraisal done two years ago, but the shelf life of a home appraisal has become shorter in the wake of the U.S. housing crisis. Home values, which many thought would continue steadily increasing as they have for generations, are now in flux. Lenders consider an appraisal outdated if it wasn't done within the last six months.

If you're thinking of selling, refinancing, renovating, or even if you just want to be sure your property tax bill is on target, you'll need an up-to-date appraisal.

According to a recent nationwide poll of Angie's List members, more than 25 percent had an appraisal done on their home within the last year; and almost half of those were ordered by their mortgage lender.

Finding an appraiser - or a lender or a real estate agent - who is reliable and trustworthy is essential in today's market. Inflated appraisals were common during the housing boom early in the decade, and helped contribute to the crisis we're now enduring.

Dean's home appraised for about $20,000 more than he expected, but the extra likely came because the appraiser factored in the value of the home subject to the installation of the pool and not "as is."

"Once we get the pool in, I have no doubt that the house will be worth what the appraisal was," Dean said.

Michael Gann, a state-certified residential appraiser with Clearwater's Isaacs & Isaacs Appraisals Inc., said the appraisal industry has been hit hard by the housing slump and lenders are asking for more detailed assessments from appraisers.

"We're changing the course of our business to provide what lenders are looking for," Gann said. "It almost kind of works out to where we have half the business we were doing, but we're working twice as hard."

Often, homeowners confuse an appraisal with a home inspection. A home inspector determines the condition of the home and its major components. Appraisers generate data from comparable homes sold recently in the area. On site, they measure the house, take pictures of the exterior and do a walkthrough to establish its condition. Additional amenities, such as a remodeled kitchen or bathroom, room additions and replacement windows are also factored in.

Gann said appraisers are often urged by their client to inflate the value of their home, but said his company has a strict ethics policy that it enforces.

"There's always some pressure," Gann said. "We just don't allow it. Basically, that is why a lot of people are complaining about the mortgage meltdown ... lending practices were so wide open, people were borrowing 120 to 125 percent of the value of the house. Then to top it off, mortgage brokers were getting appraisals that were overvalued.

"Now, lenders are going back on loans in default and not only has the property declined in value because of the overall market, but it was never worth what it was appraised for."

If you are in the market to sell your home, Gann advises you have it appraised first.

"The sales market is so volatile, before they put their house on the market, a lot of people are having it appraised to determine its true market value."

HIRING AN APPRAISER

•Use only licensed, professional appraisers who are highly rated by previous customers; members of professional organizations such as the Appraisal Institute; and familiar with property values in your area.

•List major home improvements and upgrades you've made, including the date of installation and the costs.

•Repair or replace even the minor things, such as leaky faucets and missing door handles.

•To help increase the value of your home, keep paint and floor coverings to neutral colors, and keep the yard maintained. If you live near a wooded area, clear out the brush.

•Make sure that all areas of the home are accessible to your appraiser, especially the attic and crawl space. Trim any bushes and move any items that would make it difficult to measure the structure.

•Don't follow the appraiser around, and don't let your pets follow him or her either. Distractions will inhibit the appraiser from providing you with an accurate report.

•Federal law entitles you to a copy of the appraisal report. Review it, because you may disagree with some findings. If you and your appraiser can't come to an agreement, you may want a second opinion.

Angie Hicks

Angie Hicks is the founder of Angie's List, www.angieslist.com

Share this:

Loading Comments...

Email Print

ADVERTISEMENT