Real Estate Analysis and Commentary in Peoria, Arizona

Exterior Appraisals, How to Maximize the Value of Recent Interior Improvements, by Jason Clow
July 30th, 2021 8:54 AM
By now, most everybody in the industry realizes that exterior appraisal valuations are here to stay but how do homeowner's provide recent improvement data to the appraiser without compromising or trying to influence an appraisal outcome?  The short answer is "Be Prepared".  In our firm, on all exterior appraisal assignments (or desktop assignments) we send an owner survey via email and text that allows the homeowner to provide photos that are geocoded & time stamped along with notes for each component of the home with their cell phone (via a free app) and usually only takes 15 minutes.  This allows homeowners to participate in the appraisal process by providing valuable data regarding remodeling, features, surfaces, etc.

Not every appraisal firm uses this technology, so then what?  Well as a homeowner, you can provide a detailed list of improvements performed, with dates, and estimated actual costs.  This along with photos in a word document that can be sent via PDF to your lender and passed on to the appraiser with provide important data regarding the interior condition, upgrades, and quality of your home.  

Areas of importance are flooring, kitchen, bathrooms, trim, mechanical items (HVAC / solar / water heater), paint, patio areas, pool areas, etc.  Good rear photos & side photos are also helpful when performing an exterior appraisal assignment.  Also, it is important to note that for an appraiser to value Solar, the solar system needs to be owned with no encumbrances (loans) tied to the solar system.  Leased solar systems are considered personal property.  Remember that your home is collateral for a loan and a solar system with a loan, would have to satisfied if in the unfortunate circumstance of defaulting on your mortgage, thus can not be considered.

Now with all that being said, nothing beats an interior inspection and full appraisal for many reasons, but primarily for the appraiser seeing the improvements that have been performed and the overall appeal of your home.  In addition and probably the most important benefit is a livable area measurement.  I have written blogs regarding this in the past, but we are seeing about 20% of homes that are under or over assessed because of incorrect assessors square footage.  Sometimes, there is only a small variance, but often there are large discrepancies of 200 to 1,000 sq.ft.  This can make a big difference on value and cannot be realized from an exterior appraisal.  If you feel like there may be a large discrepancy, request a full appraisal.  If you are purchasing a home without a mortgage, hire an appraiser to measure the home during your inspection period.  The stories I could share about homeowners who for example thought they purchased a 4,000 sf home to find out their home is only 3,100 sf, but paid cash and never had it measured during the inspection period could fill a blog by itself.  

So in summary, be proactive, ask your loan officer what kind of appraisal is being ordered, this will save you time in the long run.  Before applying for a mortgage, have a list made up of all improvements you have done to the property in the past.  This will also be helpful when you sell your home.  

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