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Appraising 101:

The Appraisal Inspection

Most appraisals for residential mortgage lending require interior "inspections" of the property.  Appraisers are not home inspectors.  The appraisal "inspection" is a visual walk-through of the property, much like the walk-through most buyers do before deciding to make an offer on a property.  The appraiser will typically photograph and measure the exterior of the house, draw a floor plan, take photos of most of the rooms, and make notes about features and condition of the property.  If there is an attic space or crawl space the appraiser may have to access that space for a "head and shoulders" inspection.  The appraiser will make note of obvious problems, but the appraisal process is not designed to uncover all of the hidden flaws in a property.  No property is perfect.  If you want a more detailed inspection of the property you should hire an independent home inspector.  

 

To prepare for an appraisal inspection, remove as much clutter as possible.  Make sure any access points to the attic space or crawl spaces are free of obstructions and accessible. If possible, provide a secure ladder or other means of access to any attic spaces.  Be prepared to unlock any storage sheds or other spaces so the appraiser can check inside them.

 

Most lenders require a property to be in reasonably good condition.  Cosmetic issues may affect the value of the property but do not typically require repair.  Physical deficiencies that affect livability or the structural integrity of the house are a different story.  Those deficiencies may be required to be repaired prior to closing the loan. 

 

If you are taking out a loan to remodel the house, do not begin demolition before the appraisal unless you plan to complete the improvements prior to closing the loan.  A torn-out kitchen or bathroom can present significant valuation issues.  It can also delay the mortgage process, or stop it dead in its tracks.  A dated but functioning bathroom is much better than a bathroom with all the fixtures torn out. 

 

Most appraisers are glad to answer questions about the property or the appraisal process, but they cannot discuss value.  The appraiser is usually prohibited from discussing value with anyone other than the appraiser's client.  In most cases the client is the lender or an appraisal management company, not the homeowner or borrower.  In addition, the appraisal inspection is only a small fraction of the appraisal process.  There is usually a lot more research and analysis that must be done before the appraiser can form a supported value opinion.  So feel free to ask questions.  Just don't expect the appraiser to tell you what the property is worth.  That information, along with the supporting evidence, will be in the appraisal report when the report is completed.