how to get an accurate, honest appraisal?

[barrybpdx]

my neighbor, an out-of-town landlord, has agreed to sell me her property. she doesn't plan to list the house, no realtors, no lender. she said she'd get an appraisal to determine the sales price. we haven't discussed any details, such as whether the appraisal value will simply be a starting point for negotiation.

how do i know that the appraiser is honest, skilled, and impartial? i am leery about the role appraisers played in the housing bubble, and whether an appraiser hired by the seller won't be inclined (even subconsciously) to come up with an inflated number. i guess the answer to that might be to have a second appraisal, paid for by me. there was just a story in the newspaper Home section that noted that the couple in the story had purchased their home for $213K, $40K less than the appraised price. what's up with that?

my neighbor's property has a 1200sqft single-family house on an oversized dividable lot in a desirable neighborhood of inner portland. maintenance has gone lacking. the roof must be at least 30 yrs old based on the type of shingle; the porches are rotting, gutters falling off, etc. tenants have told us that the house is a dump inside, heat and hot water are iffy...

similarly sized houses on regular lots in the neighborhood have recently sold for $210K (in bad shape, restored and resold for $330K), $320K, $330K, up to $450K.

after reading bunches of web sites that say things like "an appraiser is not an inspector, he won't turn on the furnace" i'm concerned that an appraiser won't sufficiently consider the condition of the house. how can the market value be declared without considering these things? the "market value" is the anticipated sales price, after buyer and seller have renegotiated pending the results of an inspection. so how can an appraiser ignore such things? it seems to me that, without a careful consideration of the condition of the house, any appraisal of this property will result in a value that's artificially high relative to the price it would fetch on the open market.

and regarding the dividable lot - there are very few remaining in the neighborhood. to my knowledge an empty lot hasn't sold on the open market in a number of years. so how does an appraiser value that?

comments please.

 

[The Warrior Monk]

I'd recommend making some phone calls to find out who the best appraisers are. Some of those recommendations would be

• The Assessor's Office - Assessors get to see many reports from many different appraisers. They quickly learn who the compete ones are, and who are the incompetent number hitters.
• Local Banks - The small, local banks are often very concerned about the quality of their appraisal reports, and can provide recommendations.
• Long-term brokerages - Some newer realtors are full of it, but many of the firms that have been in the business for a long time can provide the names of professionals.

If you start hearing common names being recommended amongst these different categories, you've found yourself a winner.

Good luck!

 

[Tom Barclay]

I assume that from your name that you are in the Portland area. There are several appraisers from this forum from the PDX area I can recommend and can provide you with some names and phone numbers if you'd like to PM(private message) me.
But the key here is to interview the appraiser, ask those questions that you asked above. Their responses will lead you to the best person for the job, and yes, I would recommend that you hire your own appraiser. And it will certainly pay for you to hire a separate home inspector to do a complete whole house inspection based on the conditions you describe. If you do that prior to engaging the appraiser you can provide a copy of that report to the appraiser. It can save you many times what the appraisal will cost.

 

[lcaappraisal]

I would recommend getting your own appraisal based on your own appraiser research. The landlord is free to get his/her own as well...but at least you would have grounds for negotiation. Remember, an appraisal is an opinion of value and there will always be differences in opinion.

 

[Parker]

Barrybpdx,

1.) Spend some time looking at listings in the neighborhood and get a feel for asking prices.
2.) Contact a Realtor and ask for a list of all the closed sales in a 1 mile radius of the house you are buying.

Since you are a buyer in a buyers market you might discover that for the money you are willing to spend you just might be able to get a better house than you thought.

During my past 18 years of working as an appraiser, I have seen a lot of these tenant buys from the landlord deals. Most of the tenants overpaid for a fixer.

If you sill want this house, then doing step 1 & 2 will give you some knowledge and confidence. Let the landlord pay for the first appraisal. Having done step 1 & 3 you will be a better judge of value opinion.

Befor you sign any deals, find a good home inspectior - one that is NOT ALSO a Contractor!

Good luck!

 

[Restrain]

Definitely interview the appraiser (how long in market, etc). Just because they're recommended by a mortgage company IS NOT automatically a positive. Check listings (Realtor.com). And do a similar interview for home inspectors.

No, appraisers do not turn on furnaces, etc because it's not part of their expertise. I can tell you if the compressor kicks on for an AC. I can't tell you that the temperature drop is sufficient. And I am NOT crawling through the attic to examine the depth of insulation.

Hope this helps.

 

[EVAUSA]

how do i know that the appraiser is honest, skilled, and impartial? i am leery about the role appraisers played in the housing bubble, and whether an appraiser hired by the seller won't be inclined (even subconsciously) to come up with an inflated number. i guess the answer to that might be to have a second appraisal, paid for by me.

As mentioned by other appraisers, you should interview a few appraisers and chose one you feel is most qualified for the job. The majority of appraisers are good honest people. The very few that "played ball" with the banks during the housing boom do not reflect even the tiniest fraction of the profession, or had much (if any) impact of the housing boom.

there was just a story in the newspaper Home section that noted that the couple in the story had purchased their home for $213K, $40K less than the appraised price. what's up with that?

This sounds like a selling point, when was the appraisal completed? How long was the house on the market? There could be several answers to this, for example the appraisal was 6 months old and values declined, or the sellers accepted a low offer to get out from under it.

my neighbor's property has a 1200sqft single-family house on an oversized dividable lot in a desirable neighborhood of inner portland. maintenance has gone lacking. the roof must be at least 30 yrs old based on the type of shingle; the porches are rotting, gutters falling off, etc. tenants have told us that the house is a dump inside, heat and hot water are iffy...

similarly sized houses on regular lots in the neighborhood have recently sold for $210K (in bad shape, restored and resold for $330K), $320K, $330K, up to $450K.

An appraiser will select comparables most similar to the house you are buying and adjust for differences in condition/quality/location...etc.

after reading bunches of web sites that say things like "an appraiser is not an inspector, he won't turn on the furnace" i'm concerned that an appraiser won't sufficiently consider the condition of the house. how can the market value be declared without considering these things? the "market value" is the anticipated sales price, after buyer and seller have renegotiated pending the results of an inspection. so how can an appraiser ignore such things? it seems to me that, without a careful consideration of the condition of the house, any appraisal of this property will result in a value that's artificially high relative to the price it would fetch on the open market.

and regarding the dividable lot - there are very few remaining in the neighborhood. to my knowledge an empty lot hasn't sold on the open market in a number of years. so how does an appraiser value that?

comments please.

The appraiser will consider quality and condition in his/her report. We do not typically climb into attics and crawlspaces, test electrical and plumbing. I'll turn on some lights, test af few toilets, and look under the sink at the plumbing, looking for anything that could impact value, but this does not replace a home inspection. Provide you appraiser with a list of repairs/updates, or even better, a home inspection report.

 

[Lobo Fan]

Appraisers are not home inspectors. I would recommend getting a good home inspection and then providing a copy of the home inspection report to your appraiser. Get your own. One way is to go to the Appraisal Institute website. Or you could get a local from this board. Refrain from giving target numbers are too many details about the transaction. Just agreeing upon an appraisal to determine a future selling price should be sufficient.

As far as buying a house for $40,000 under appraisal, that happens when the appraisal was for a refinance and could be several months to years old. Many markets have declined 20% in the past year. If it sold for 20% under a recent appraisal there could be unexplained situations such as pending foreclosure, family emergencies, or financial problems. Someone just losing a job may want to get out from under a big house payment before their credis gets whacked for example.

I hate to admit this but often refinance appraisals can come in on the high side. There are more honest appraisers out there than flaky ones. I suggest you ask around.

Realtors and loan officers usually define "good" appraisers as the ones that do not kill commission checks, so be careful going that route. I would start with the AI site. Any appraiser still paying AI dues is probably pretty solid.

 

[Walter Kirk]

As others have posted, appraisers are not inspectors. I would hire my own inspector and my own appraiser. There are several appraisers on this forum who are capable and experienced in the Portland area. The cost of both the inspection and appraisal should be a fraction of 1% of the market value of the property per your description. Spend a little money and get piece of mind.

One factor that you don't seem to consider is the value of the site. You describe it as being oversized and dividable. Given the restictive zoning in the Portland area the site may be more valuable than you imagine. A complete highest and best use analysis will be required.

 

[John McDonald]

Find out who the Realtors and mortgage brokers hate. They are probably honest appraisers.