Want to know the 3 most important questions to ask when looking for the right real estate appraiser?
I am sharing the secret to exactly how to find the right home appraiser for you.
Finding the right real estate appraiser to value your house is the most important decision of the appraisal process.
And knowing exactly what questions to ask is imperative to finding the right property appraiser for you.
I’m going to tell you exactly what to ask when you make that phone call to interview the possible candidates.
This post is all about exactly how to find the right real estate appraiser for you.
Looking for a Real Estate Appraiser
First, I always asks our clients where they found us for two reasons:
#1 – We like to say thank you to anyone who refers a client to us for a property appraisal.
#2 – We like to keep track of where our business comes from.
It’s not surprising that many of our clients found us on a google search and really liked our reviews.
(So, thank you to everyone who takes the time to share your positive experience!)
Your opinion really matters and is helpful for future clients to understand who we are as a company.
There are many questions that can be answered in the reviews about our exceptional customer service.
But, what’s not found in the reviews is the amount of behind the scenes work that go into each and every appraisal report.
This is why it’s so important for you to know exactly which questions to ask the real estate appraiser during your initial conversation.
What Question to NOT ASK FIRST When Looking for a Real Estate Appraiser.
Most people, when searching via google, will enter either “real estate appraiser near me” or “home appraiser near me”.
Sometimes they will add their city such as ” real estate appraisers in Philadelphia”.
Then, they will scroll through the results.
(Keep in mind that all of the ads are at the very top, so you will need to scroll past those to get the real results of who has the best online presence.)
Next, the client will either make a phone call or send a message asking only one question….. how much does an appraisal cost?
While this is an important question, quite often it’s the only question and the only standard by which a decision is made.
As a result, the report they receive may not be the report that best serves their needs.
Yes, you should ask how much the appraisal will cost.
However, this question should be number 4 or 5 in the process.
RELATED POST: 3 Important Dates of an Appraisal You Must Know
What Happens When You Don’t Ask the Right Questions First?
If the appraisal is ordered based primarily upon the cost of the appraisal then usually, one of two negative consequences will result:
#1 – The client will seek out a second opinion……… ultimately costing them more money than if they had asked the right questions in the right order at the very beginning of the process.
OR
#2 – The client will not even realize the report is misleading or insufficient and make a decision based upon erroneous information resulting in a financial loss.
This type of decision making and resulting consequence happens daily.
Lenders do it all of the time.
So it’s not surprising that a typical homeowner does it also.
How do I know?
Because I am shown these appraisal reports.
And, I can see within 10 seconds if the real estate appraiser was the best appraiser for that assignment just by looking at 3 specific items which I will share with you in a sec.
These 3 items are not things that are immediately noticeable to anyone outside of the appraisal industry.
Basically, I am giving you all of the secrets so you’ll know which questions to ask.
Spilling the Secrets: 3 Most Important Questions to Ask First.
It takes many years of education and experience before we are permitted to take (and pass) an extremely difficult, 3+ hour test before the state will grant us a real estate appraisal license.
But, the market is continuously changing.
And because of this, as appraisers, our education should be ongoing, never-ending.
Some appraisers go above and beyond what is mandated or expected.
These are the appraisers that you’ll want to hire to value what is most likely, the most valuable asset you own.
Especially if you have a unique property or a high value home.
Below are the most important questions that you should ask in order to find the right real estate appraiser for your property.
Ask these questions in exactly this order below.
If the first question cannot be answered then, there is no reason to continue the conversation.
Question #1 – How will you determine the highest and best use?
This is the best question to start with because if the appraiser cannot give you a clear answer then you do not need to ask any other questions.
Highest and best use is the very first consideration that our office researches before taking on an appraisal assignment.
In order to provide the most reliable opinion of value we must provide the reasonably probable and legal use of your property as if vacant AND as if improved that is physically possible,
appropriately supported, financially feasible and that results in the highest value for your property as of the effective date of the appraisal.
That’s a mouthful, I know.
However, the answer that you should receive does not need to be long or complicated.
If you receive a response that is confusing, then ask for a simpler explanation.
A really easy and acceptable answer to this question is: “First, I will research the zoning for your property which will then help me to decide the next best course of action.”
Simple, right?
So if the appraiser is unsure of how to answer this question then you should most definitely move on, wish them a good day, and call someone else.
Question #2 – How will you determine the zoning?
Just because there is already a house existing on the lot does not automatically mean that the use per zoning is “Legal”.
We have appraised many houses in Philadelphia and suburbs that are considered “Legal/Nonconforming”.
Matter of fact, this occurrence is extremely common in our market area.
Also, if the use of your property is “Illegal” this is another issue that must always be addressed and thoroughly explained within the appraisal report.
Determining the zoning is imperative to a credible appraisal report.
Here are just 2 examples why the zoning is so important:
- Imagine, if you purchased a house and it later burned down. Then, found out that you could not rebuild it due to zoning restrictions?
OR
- What if you purchased a house with an in-law suite and the zoning was not properly disclosed and researched? Then, later you try to either resell or refinance the house and find out the second kitchen was not permitted and needs to be removed in order to obtain financing.
These are true story nightmare situations that could be avoided if you were made aware of them within the appraisal report prior to purchasing that property.
Unfortunately, not every appraiser reports the zoning correctly.
They should but they don’t.
In the Philadelphia market area, each township, borough and city has their own individual way of determining the zoning and how this information is made available to the public.
Therefore, sometimes we can find our answers online and sometimes we will need to speak directly with the zoning officer.
Often we will need to do both.
So, an acceptable answer to this question is: “I will begin with looking at the zoning maps and zoning code and I will directly contact the zoning officer with any results that are unclear”
Question #3 – How will you decide the adjustments and will I be able to understand them?
In a typical appraisal report, the real estate appraiser will be looking for sales in your market area that are considered to be reasonable substitutes for your property.
Once the most comparable sales are chosen, the differences between those sales and your property need to be analyzed and adjusted, if necessary.
When determining the adjustments, the appraiser will decide which dollar amount reflects the market reaction to the differences.
The dollar amount could be anywhere from $0 to infinity.
There is no set dollar amount because each property is different.
Here are a few examples of important factors we must consider when applying adjustments:
- DATE OF SALE: has the market changed since the date of sale (or contract date) of the comparable vs the effective date of the appraisal?
- LOCATION: is your property located on or near a busy street, in a flight path of an airport, in a flood zone, within a specific school district, in a historical area, etc?
- SITE: are there any deed restrictions that limit the use of your land?
- VIEW: do you have an awesome view of a city skyline, meadow, lake, etc?
- QUALITY: what is the level of custom finishes and types of material used in your house?
- CONDITION: is your house impeccable or, are there some minor or major repairs that are needed?
- GROSS LIVING AREA: the size of your house (this measurement does not include unheated areas, basements, garages or extra amenities)
- EXTRA AMENITIES: such as separate in-law suites, pools, hobby rooms, barns, riding rings, etc
The above is just a bare bones, off the top of my head, list of items that we come across frequently in our normal work day and must consider how much of an adjustment is warranted.
Like I said, each appraisal is different, and there are many more items to consider.
However, what’s most important is that you have a crystal clear understanding as to how each comparable sale was chosen and how the adjustments were determined.
If you are reading a report that does not describe exactly how and why an adjustment was applied then I would not rely upon that appraisal report.
So, an appropriate answer to this question would be: “I will explain, in detail, how I arrived at each and every adjustment.”
Bonus answer: “I will also provide graphs and charts that support my explanations”
The real estate appraiser has answered all 3 questions to my satisfaction, now what?
Once you are happy with the answers you have received to the questions above then, it’s time to ask about the appraiser’s fees and availability.
So, the question of cost should be question number 4 or 5…. or maybe not at all if you didn’t like the answers to questions 1, 2 and 3.
After all, there is no point is finding out what the cost will be for a real estate appraisal report that is not reliable or defensible in court.
