Appraisal scheduled. Do I need to provide anything?

nhbasketsMay 14, 2013

We are in the process of refinancing our mortgage and the credit union we are going through has scheduled a full appraisal for next week. Over the past 4 years we have put a lot of money into our home, at least $100K. This included a total new kitchen, master bath, half bath, hardwood floors, furnace, roof, some windows, plus lots of landscaping.

I want the appraisal to come out as high as possible as we are taking funds out. Should I provide the appraiser with a list of what has been done, the dates, and how much we paid?

Even with the market coming back slightly, I'm nervous about what the appraisal will come in at. I'm sure the reality is not like the shows on HGTV where they spend $50K on renovations and their equity increases 150%. I could only wish!

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sushipup1

The only thing that will matter to an appraiser is the sellling price of similar properties. He won't care aoout what you spent for anything, it won't matter.

We are also refinancing, and I plan to have a friend who is a RE sales agent to be here with a list of comparable properties.

    Bookmark   May 14, 2013 at 8:17PM
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emma

You need to rethink the refinancing your home. My children would have to be starving for me to refinance my home. This home is very important when you retire. If you don't have it paid for, you may end up in a low income area. Drive through some of the bad parts of your city, believe me you don't want to live there.

    Bookmark   May 14, 2013 at 8:41PM
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LuAnn_in_PA

" This included a total new kitchen, master bath, half bath, hardwood floors, furnace, roof, some windows, plus lots of landscaping. "

Much of that won't get you a decent return, as it is considered part of the necessary upkeep of the home
And things like landscaping can actually be seen as a liability.

You will not appraise 100K higher, even if you put that into it.

    Bookmark   May 14, 2013 at 9:38PM
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cmarlin20

You need to rethink the refinancing your home. My children would have to be starving for me to refinance my home. This home is very important when you retire. If you don't have it paid for, you may end up in a low income area. Drive through some of the bad parts of your city, believe me you don't want to live there.
Very harsh, you know nothing about the OP's finances or refinance terms.
When I refinanced, I've gotten good comps from a local agent, then typed up a list of my improvements to give to the appraiser. Stick to the big items, don't be petty, it looks silly. I would not list the dollar amounts, it is not relevant.

    Bookmark   May 14, 2013 at 10:08PM
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maifleur01

Not harsh realistic. Taking money out of your valuation is what caused lots of owners to be under water when the real estate collapsed. The house appears not to have enough equity to receive a loan on.

Ask someone that was foreclosed on if their next residence was better or worse than the house they were living in. I worked with many that supported family members and also took their equity for living expenses. They will be lucky to have anything other than their SS to live on.

    Bookmark   May 14, 2013 at 11:18PM
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jlhug

Providing a list of improvements can't hurt. It may not help, but it can't hurt.

When I was an appraiser years ago, I found such lists helpful. I also appreciated a list of comps of closed houses. Again, the appraiser may not use the comps you give him but it doesn't hurt as long as you do it nicely. I had one client shove a list at me and tell me that these comps were the ones I had to use.

I always found a copy of the "as built" survey helpful.

    Bookmark   May 15, 2013 at 11:37AM
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emma

It will be more harsh when they have retire with no home paid for and live in a cockroach ridden slum area where you aren't even safe with doors and windows lock.

    Bookmark   May 15, 2013 at 7:30PM
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nhbaskets

Calm down, Emma. We have plenty of equity in our home so I won't soon be force to live in a cockroach slum with no doors. Major reason for the refi is to lower our rate.

I appreciate the input received. Plan to provide list of work we have had done. I'm not sure how to go about providing comps. Do I look on Zillow and provide addresses of houses that have sold over the amount I'm hoping for? How far back do they look at comps (e.g., 6 months, 12 months, older?)

    Bookmark   May 15, 2013 at 8:06PM
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sushipup1

No, don't use Zillow, it is notoriously inaccurate. If you don't have a friend who works in real estate, then don't worry about it.

Our appraisal was today, and it's difficult to get comps because of the acreage that we have. The appraiser was interested in knowing what value we were aiming for (no cash out, just the current balance to lower the rate) and said that he had no trouble meeting that value.

Emma, your comments are entirely inappropriate on this thread.

    Bookmark   May 15, 2013 at 8:16PM
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cmarlin20

People retire comfortably every day with mortgages large and small.

Not everyone with a mortgage lives hand to mouth each month.
No need to scream about slums.

    Bookmark   May 16, 2013 at 10:17PM
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nhbaskets

One last question. Our kitchen has been featured in two regional magazines and is used by our kitchen designer in her advertising. Would it be tacky to have the magazines out or available or at least mention it to the appraiser?

    Bookmark   May 18, 2013 at 6:40PM
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sushipup1

Sure, why not. But it really doesn't matter to the appraiser who is looking for local closed sales of similar sized houses. Generally the info they notice is whether the appliances, carpets, etc are low grade, medium grade or top grade.

When the appraiser is there, ask if he'll share a little about what his job entails. But try not to influence him, it won't work. Your house might be wonderful but if it is over-improved for the other houses in the area, you won't see it reflected in the price by much.

    Bookmark   May 18, 2013 at 6:46PM
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triciae

Your appraiser cares about the total s.f., # of bedrooms, # of baths, quality of construction (also is it reasonable to your neighborhood), view (water view, mtn vista?, etc.), condition of furnace, A/C, appliances, roof, siding, landscaping, etc.

Most of what you listed are considered "maintenance" items such as roof, windows, landscaping, and furnace. So, replacing or adding to those items will keep the appraiser from dinging you for deferred maintenance but unlikely they will increase your home's value much, if any.

You can, generally, expect to see 40%-60% back on upgrades like kitchens, baths, etc. Adding on to a home to create something like a 3rd half-bath may not increase the home's value at all. Adding a new garage is notoriously bad for increasing overall value. You are correct, the real world is nothing like HGTV. :)

I worked as a work-out real estate specialist for 20+ years. I've pretty much seen it all. Let the appraiser know what you have done to the home but don't try to push or interfere with him/her. Appraisers are much more independent than they were before the r.e. bust and rightly so.

Good luck. I hope this new mortgage is for a lesser term than previously and with a fixed rate if you are as so many Americans with your home being your largest asset. I also hope that this cash back re-finance is part of an overall well considered financial plan. For the vast majority of Americans it's better to retire a mortgage and have the security of seeing your Note & Mortgage stamped "Paid in Full". But, that's not true for ALL. Sometimes, there are really valid reasons for using real property as leverage for something else. Only you know.

/tricia

    Bookmark   May 22, 2013 at 12:58PM
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