A few days ago I met a real estate appraiser named Rosalyn at one of the Monmouth County NJ homes I have listed. Within less than 2 months of being on the market, this home had 3 offers to purchase and was now under contract...Yay!
Rosalyn the appraiser was very focused on what she needed to observe as it pertains to the home. Once she was finished, she was willing to indulge my curiosity as whether or not the changing real estate market has affected the appraisal process.
Being the sponge that I am, I looked at this as a great opportunity to "pick her brain" and ask a few questions that might be helpful to my clients. I chose the 5 questions below, because they often lead to spirited debates between myself and other Realtors, as well as first-time buyers or home owners who are in the process of selling.
Thanks to Rosalyn for sharing her expertise!
1. The square footage of a home also includes the total square footage of the basement.
FALSE: According to Rosalyn, a home's true square footage only includes the actual living space. If an area is a below grade basement (meaning underground and not a walkout), then that basement is NOT considered actual living space, and should NOT be calculated as part of a home's square footage. She said in NJ and in many states it is acceptable to measure the actual square footage of the basement and note that separately as additional square footage but NOT as living space.
2. A home's appraisal value should be equal to or greater than the home's tax records assessed value.
FALSE: Although many cities and towns across America are reconfiguring their tax rate calculation formulas to reflect current real estate market values, there are thousands of cities who have not. Therefore, you cannot always expect a home's appraised value to be equal to or exceed the "tax assessment value."
3. If you're selling your home, you are entitled to receive a copy of the appraisal the buyer's mortgage lender ordered.
FALSE: Neither the buyer or their mortgage lender are required to share the appraisal information with you. The appraiser is not allowed to share their evaluation results with you either.
4. If you give your home an extra good cleaning and de-clutter, your home will appraise for more money.
FALSE: According to Rosalyn, appraisers do not base their evaluations on how "neat & tidy" your home is. The things that will likely have the greatest impact on what they assess your home's value at will be size, condition, upgrades, location, view (ocean, beach, etc) closeness to amenities (pool, golf course, etc) and/or facilities (bus, ferry, train, etc) and recent sales of comparable homes.
5. If you add certain upgrades to your home you will get a dollar-for-dollar return on your investment when you sell the home.
FALSE: Many appraisers will agree that updating things like a kitchen or bathroom or finishing a basement can definitely be a positive step toward increasing a home's value. However, despite how wonderful the upgrades may be they won't necessarily increase the value of your home to the extent where you'll get a 100% percent return on the money you spent. Here's a great article from the NAR (National Association of Realtors) that explains "cost vs. value" in greater detail.
Information courtesy of:
AMBER NOBLE-GARLAND
Waterfront Homes Expert & Short Sale Specialist
Weichert, Realtors
455 Route 9 South
Manalapan, NJ 07726
917-723-5645 - cell
732-536-4400, ext 199 - office
www.AmberLovesRealEstate.com
"Your Reliable Resource For NJ Real Estate, Local Info & More"
Very informative...great entry
Good information..thanks for sharing.
Great information, Amber! Here are a couple other things I can add:
The person who pays for the appraisal --in a sales transaction, that would be the buyer -- IS entitled to a copy of the appraisal if they ask for it.
Also, when figuring the value of basement square footage, here in NC at least, even if the walkout basement is completely finished out to the same standards as the above grade living space, the most value an appraiser can give for that below-grade square footage is $40/sf. Homeowners and some agents tend to figure basement living space at same per sf price as above grade, and end up with an inflated value, and a disappointment come appraisal time.
Thanks for your good info!
Amber, thank you for de-bunking those awful myths with your true, factual info. That was great!
Join my new AR group and post your blog at http://activerain.com/groups/virtualoffice
Regina P. Brown
It is so funny how sellers always assume their glamorous finished basement is going to add 200% over what it cost to finish on to the value of their home. FALSE:)
Amber - You chose 5 great questions to ask Roslyn. Very informative regarding the appraisal proces and how "it works". ~ Chris
Great questions - #1 especially irks me when LISTING AGENTS include the basement footage in the sq. foot amount. Very misleading and flat out wrong.
Amber,
Often for my BPOs, I wrestle with square feet on bi-level homes. Mostly above ground and walkouts. Local assessor records include that area when finished and heated. Many BPO companies want it excluded - even when all the bedrooms are on the lower level. Not an easy call!