Category Archives: Articles

How to Prepare for an Appraisal

AAI Services senior appraiser, Michael Mathis, has been appraising for more than 33 years exclusively in the Inland Empire.

My appraiser is coming in three days. What can I do to get the highest appraisal possible? Simple, install a new kitchen, master bathroom, new flooring and paint. You might even consider new front and rear landscaping.  No!  While any of the listed items could help raise your home’s value, the question you should really ask is “are there any easy or simple things I can do in a few hours that might help my property appraise for more”?

The good news is that there are. The first thing you need to do is take off your rosy colored glasses and look at your property like a buyer would look at it. That simple change in viewpoint will help you see and then prioritize the items that will make the biggest difference in your home’s appraisal. Bottom line, if something bothers a buyer, he or she will pay less for the item. So, your goal in getting ready for any residential appraisal is to eliminate items that might bother a buyer.

Many appraisers will argue that cleanliness or minor repairs do not impact a property’s value, but this is wrong. They might even say that nothing you can do will make a difference. Again wrong. Remember an appraisal is an opinion of value. If someone sees a filthy property it will lower their opinion of it, and as a result the final value can easily slide downward. Avoid this, clean your property and make minor repairs before the inspection. And if the appraiser pressures you for a certain date remember they work for you, not the other way around. Do not be rude but be firm to set an appointment date and time that works for you to have your property ready to show its best. So, what are you going to work on and in what order?

First and foremost, clean up the house. If something looks messy, cluttered, or worse yet dirty it will not attract the same attention from buyers than the same property, clean, organized and clutter free. Your first goal should be to clean your home up. Remove junk from the floor, tables, and even rooms IF possible. And yes, all the little knick-knacks that you think are so cute are actually probably viewed by your potential buyers and appraiser as clutter. Rule of thumb, if you are not sure that the item should stay, remove it. As for cleaning, remove dust where it is visible, sweep and vacuum the floors, clean the sinks and tub/showers and wipe grime off doors and walls.  If your property has a view of something special, make sure that window(s) is clean to enhance it. A clean property will be more appealing and will garner more value, hence obtain a higher appraisal.

If something small is broken, e.g. a doorknob thatdoes not turn, a closet door that no longer slides, a cabinet door that is missing or a hole in a wall, etc. take an hour and fix it. The fewer things that are wrong with a property, the easier it is for a buyer to form a positive opinion about it and the better chance its value will be higher. And remember a significant part of an appraiser’s job is to estimate how buyers will react to a property and how their reactions will be reflected in the price they are willing to pay. What that means is that if the work would impress a buyer, it should be reflected in the property’s appraised value.

Finally, first impressions are important, so your goal is to help your appraiser think, “that looks nice” when he/she first pulls up to your property.  Therefore, if your front yard is overgrown and your flower beds have more weeds than flowers, consider giving them some attention. Mow the lawn, pull the weeds, maybe even add some colorful flowers to the beds. This effort enhances your property’s curb appeal. The good news is that for most properties curb appeal can be enhanced in a just a few hours.

Beyond these simple items are ones that involve more work and money. Interior and exterior paint is very high on the list, but before you do that make sure you are picking colors that will have broad appeal. Painting rooms black or vibrant purple is not a good idea. Talk to your local paint store expert or a friend who has that magic touch to get ideas for paint colors. But I would not paint, unless you have the time to complete the job since an unfinished job screams I need work and few people want to buy work.

One last caution that will not increase your property valuebut will go far to protect your wallet from an additional cash loss. Virtually every lender will require that your property has working smoke detectors in every bedroom, carbon monoxide detectors protecting every hallway that leads to a bedroom and water heaters that are double strapped and have their pressure relief value piped to the ground. Also broken windows are typically not tolerated as they are considered a health and safety item required to be fixed before a loan funds. If any of these items are missing or are broken, take care of them before your appraiser arrives. If not, he or she will be forced to condition their report on their correction and you will have to pay them to come back out, verify they are present, take a picture and write an additional report and charge you around $200. Save your money and fix these items first.

These value enhancing items I have shared actually require little time, cost almost nothing, and yet will go a long way to help you obtain the highest possible appraisal of your property. If you have a question about something not covered on my list, send me an email, or call me and I will be glad to respond. Good luck!

Why Service Area Is Important?

AAI Services senior appraiser, Michael Mathis, has been appraising for more than 33 years exclusively in the Inland Empire.

Have you ever been lost and tried to ask a stranger for directions only to be quickly halted with the words, I am new here and really can’t help you?  Undoubtedly, you were grateful for their honesty when they admitted they couldn’t help you or worse, maybe they thought or pretended that they knew, gave you directions and you suffered being lost even longer until you ran into a local who quickly and accurately set you on the right path.

Unfortunately getting an appraisal is often just like being lost while attempting to find a knowledgeable person to help you, the difference is that the stakes are much higher – the correct valuation of your asset that is worth hundreds or thousands of dollars. Many appraisers pretend to know things they don’t and are all to willing to talk people into their services even though they live 75 miles away, lack familiarity with the property’s market, or lack experience doing the type of work being requested.And worse yet, many of those appraisers are unwilling to put in the extra work necessary to overcome their lack of competency, i.e. spending more time driving the neighborhood to know its boundaries, calling local agents to learn about  research, phone calls, driving the area and more. Sad, but many appraisers perform work they are not competently trained to perform.

Of course, on the phone they sound great. Why shouldn’t they?   If you are not a mechanic doesn’t every service manager sound extremely knowledgeable?  Doesn’t your doctor always sound like a genius? These and other professionals universally sound great because they are talking about something you will know little about, so it is easy to impress you. So, what can you do?  How do you protect yourself?

A simple starting point and the purpose of this blog is to caution you to work with an appraiser who is extremely experienced in your market – the place your property is located. If a company brags that it covers from Santa Barbara to San Diego and from Los Angeles to Baker or Needles, RUN!!!  That will not be the company where you will find an experienced and knowledgeable appraiser for YOUR property.

Instead look to work with someone who has intentionally limited themself to the area they lived and its surrounding cities. In the case of a large area, like the Inland Empire, make sure they have been around long enough to have been naturally exposed to the market your property is located. While this does not guarantee competency, it certainly is a critical foundational starting point.  The rest will not matter if you do not get someone who knows your market.

What an Appraisal Is

This is the first in a series of blogs that will explain what an appraiser does to create an accurate and reliable appraisal. But before I explain the process, it is beneficial to understand what an appraisal is, and even more significantly, is not. This blog will focus on the is not portion.

Many people seeking an appraisal for a mortgage loan or who are selling their home and seeking advice to establish a selling price tell me to “make it a good appraisal” and then add something like because we want our home’s value to be higher, or we don’t want the market to go down because of a low appraisal or we need a high appraisal so we can sell our home for $XXX dollars. The implication behind the statement/request is that an appraiser has some special power or influence over the value of a home or homes in the person’s neighborhood. Nothing could be further from the truth.
One of an appraiser’s most important obligations is to be a reporter, not in the unfortunate reality that CNN, MSNBC or Fox reports news have become to represent the word, i.e. with a bias, but instead in the old-fashioned meaning of the term, one who tells what is going on without bias. And if a reporter does his/her job correctly, they do not influence the outcome, but rather share what has and is unfolding.

Real estate markets, like the stories on the news seldom are not influenced by the reporters, but rather by the players, the people in the middle of the action. How is the typical home sale created? A person, either through an agent or on his/her own, puts their home up for sale and some perspective buyers look at it, normally walk through it and then make an offer, some negotiation might take place, and if all ends well the property goes into escrow and eventually closes, i.e. is sold. Few buyers, very few, get an appraisal BEFORE going into escrow (why that is potentially not a good thing can be addressed in a future blog) and only then is an appraisal ordered. Note, the normal way people buy homes is not influenced by its appraised value because the appraisal comes AFTER the purchase/sales price has been decided.

Of course, there are instances when the appraisal influences a property’s sales price, normally when the report does not show support for it. In such instances, either another report is ordered or more commonly negotiations are reopened, and a new value is agreed upon. But this takes place in well under 5% of all home purchases. In fact, most estimates place it under 2%. That means that in 2017 approximately 5.4 million sales were agreed upon without an appraiser’s influence and roughly a little over 100,000 were influenced by an appraiser’s judgement. Clearly, appraisals do not establish market values, but rather only report on the estimated value of a property using data established by buyers and sellers in a given area. So, a “good appraisal” is one that accurately observes and describes the property and its market and with that information estimates what its most probable sales price will be as of a specific date. I will discuss more of what constitutes a good appraisal in my next blog.