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Home Appraisal - Answers to 8 Common Questions - YouTube

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hey this is Jeremy from shine insurance

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and I'm here today with a bill Fromer

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from Frommer appraisals Inc and we're

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talking appraisals bill thank you so

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much for joining us glad to be here

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Jeremy so what is an appraisal easily

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answered an appraisal is the

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professional appraisers opinion of value

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but what I should first say what an

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appraisal is not is and this is a common

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question an appraisal is not a home

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inspection so we commonly get confused

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with home inspectors if you've ever had

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a home inspection they they're very

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meticulous time-consuming they look at

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all the components of your home and

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essentially they tell you what's bad

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with your home and what's not working so

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an inspection is really really someone

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who digs into the details of the home

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all the different parts of the house

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what's working what's not working and

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the reason for that is to help a

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potential home buyer understand what

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they're getting into with the structure

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of the home correct and I strongly

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encourage any buyer for that matter

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first-time home buyer to employ a home

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inspector your Realtor will guide you to

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that along with the appraisal that way

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you get an assurance that the home is in

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good working order that you don't buy a

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home with a bad roof or a bad furnace

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that you have to sink four or five

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thousand dollars into but yes the home

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inspector will look at the components of

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the home my job the appraisers job is to

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generally view the home condition the

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real estate and then compare that home

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with other sales current sales of

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similar homes to to verify value okay so

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the appraisers job is to verify values

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all right correct we are we are employed

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and this is an important point too that

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people have a hard time understanding

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the appraisal the appraiser is ordered

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by the client

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which is the lending institution

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although you as a homeowner are paying

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for the appraisal the client that we

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deal with is the bank so we report to

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them and confidentially we report to

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only them we understand that the body

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homeowner owns the report but we have to

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be careful on who we talk to okay so the

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Fraser is hired by the bank as verify

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the value and why then does the mortgage

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company hire you what's the what's the

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reason for them to need to hire you and

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have you do that work to essentially say

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this is the sale price the agreed sale

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price of the home the appraised value

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matches that or exceeds it and that's

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all on file so it's a supporting

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document that's required so then how do

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you come to a final number what are the

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some of the things that go into making

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an appraisal on there are two main

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components to a residential appraisal

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it's it's the number one is what we call

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a sales comparison or the market

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approach which is heavily weighted and

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then we do what we call a cost approach

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which is much like what you deal with

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homeowners insurance where the insurance

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they want to know what's the cost to

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build this home right what's the site

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worth and then what is it cost to build

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this home sales comparison is just that

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we we look at recent sales of the most

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similar homes and we compare it with the

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subject home ideally that would be the

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home next door to you on both sides and

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the home across the street that's not

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always the case to the different sized

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home they could be and it's if you're in

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a subdivision of tract homes it becomes

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easier it's not a perfect world so you

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don't have all three of those sales but

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every house in my opinion has four to

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five good comparable sales which is

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typically what we provide in a report

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four to five so that's what you see from

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Realtors or whatever if someone's

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looking at the value of a home for sale

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they're looking at other

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homes in the area that are maybe similar

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size and close in proximity and what

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they have sold in the recent past for

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exactly yes you'll have if you work with

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a realtor they do what they call a CMA

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which is a competitive market analysis

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doing the same process that we do maybe

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on a summary basis a lot of the Realtors

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will call me and say I can't find comps

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we call them calm I can't find good

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comps for this house right can you help

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and it's common because there are tricky

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houses tricky properties okay so there's

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a market value the intention to figure

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out what the value of a house is not

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based really on what it would cost to

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build it but based on what someone would

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buy it for correct but then there's some

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there's another factor you mention is

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the second factor which was you know

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what it would cost for us to build that

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structure is that a major player in

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appraising a house it is more of a

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second player where we apply a value to

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the home we add the site value and then

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we apply a measure of depreciation based

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on age and condition so all that stuff

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comes together to a number that you

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present to the mortgage company to

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either support the purchase price of

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this house or not essentially support is

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a good word because in the rules of our

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profession we are required to be to have

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a look at the purchase agreement some

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people think that that's an advantage to

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the appraiser and maybe it is it's their

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rules so if I'm doing a purchase

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agreement appraisal I'm required to get

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a signed purchase agreement from the

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Realtors so to make that clear what

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you're saying is that before you start

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doing your appraisal your assessment of

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the value of the home you're kind of

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required to look at what it's

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potentially being sold for correct so

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you know beforehand and the question

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then comes up does that change your

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perspective on how things go you kind of

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know there's almost maybe pressure a

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little bit to get to a certain number

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does it feel that

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away from your head we don't feel any

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pressure or I don't feel any pressure

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but it's looking there's a process that

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I start with I look at the purchase

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agreement I look at the MLS history how

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long the house has been on the market

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has it been a struggle to sell at this

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price is it a distressed sale is it a

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normal what we call arm's length sale

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which most of them are so all that comes

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into play there there should not be any

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pressure as you say to hit that price so

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if I'm a new home buyer when it comes to

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appraisals do I have do I hire the

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appraiser if you're going through a

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mortgage lender no okay your your lender

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will hire do I have to schedule the

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appraiser coming out and taking a look

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at the house I'm considering buying if

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it's no if it's listed on the MLS we

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contact the listing agent

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sometimes on a for sale by owner where

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individuals are not using a realtor

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they'll give us a contact and typically

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that's the person that's selling the

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house who's living in the house yeah do

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I have to be present at the appraisal

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you do not have to be in my opinion

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you're more than welcome to be ok cool

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and when do I pay you when does the

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money transfer ahem yeah since the

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appraisal on a purchase situation is

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ordered by the mortgage lender it's the

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clients they pay the appraiser and it

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comes out of your fees in the final

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closing so when you're looking at your

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closing statement that has all those

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different light items one of those will

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be the cost of the appraiser as a part

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of its clearly defined is that ok cool

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if someone wants to get connected with

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you bill how do they do that

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my email address is w PF r om

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e at home finder dot org well bill it's

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been awesome talking with you and really

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I didn't know a ton about the appraisal

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process so I learned a lot in this you

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know short period of time so thanks for

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sharing this information with us thank

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you I love talking about my favorite

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subject if you enjoyed this video there

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are many

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