| Home appraisal values have seen a decline from the | | | | 2)Line item adjustments over 10% |
| values of a couple years ago. Many lenders have | | | | 3)Net/Gross adjustments over 15/25% |
| moved to national appraisal companies in efforts to | | | | · Excessive adjustments show that you truly do not |
| bring consistency to home appraisal values. Below, we | | | | have a comparable property |
| are providing helpful tips in reference to residential | | | | 4)Across the board adjustments on the comps |
| appraisals and things you should keep in mind. | | | | · if all the comps have an adjustment such as for a |
| Appraisal Tips: | | | | pool, this is not acceptable. |
| It's important to remember if the property is overbuilt | | | | · you must have a comp(s) that supports the |
| for the area: unique in size, bedroom count or other | | | | adjustments for an item (i.e. pool, no garage, |
| unique factors, its not allowable to simply adjust to | | | | accessory unit/quarters, workshops, etc...) |
| make it work. Similar comps are the key to allowable | | | | 5)Appraised value must be bracketed by the comps |
| adjustments. In addition to comps being similar in | | | | · if you have 3 comps with adjusted values that are |
| aesthetics they must be in reasonable proximity | | | | far apart - this is not acceptable. |
| depending on the area. | | | | · the value cannot be based on listing comps. Listing |
| Suburban and Urban properties should have comps | | | | comps are to support the value. |
| within a mile or less of the subject property. Comps | | | | · the value cannot be above the adjusted values of |
| that come from the other side of a major highway or | | | | the comps |
| in another town are hard to validate. | | | | All Appraisals must contain the following: |
| Net/Gross adjustments for comps should not exceed | | | | *1004MC or appraisal type DU/LP(automated |
| 15%. In some cases larger adjustments may work | | | | underwriting engines) allows reduced appraisal types. |
| depending on appraiser's notes and reasoning. Line | | | | However, they are not allowed on: Cashout, New |
| adjustments should not exceed 10% of the sales price. | | | | Construction, Loans requiring mortgage insurance. |
| Again, appraisers may exceed the 10% slightly with | | | | 1)The addendum page must show the Remaining |
| appropriate explanation. | | | | Economic Life. |
| APPRAISAL KEY POINTS | | | | 2)The Appraiser's signature must be present. |
| Page 1 of the Appraisal | | | | 3)Sketch Page must be present. |
| Declining Market | | | | 4)Location Map is key for the underwriter to determine |
| · Over Supply | | | | neighborhood. |
| · Marketing time over 6 months | | | | 5)Photos (front, back, street view, interior photos, comp |
| · this is typically not acceptable. | | | | photos) |
| *Appraised value of the predominant value for the | | | | 6)Flood map |
| market area | | | | Home loan values are contingent on neighborhood |
| · the appraiser must comment on the affect it would | | | | factors as well as the appraiser's ability to find |
| have on the subject. | | | | comparables within a reasonable distance that have |
| *Interior and Exterior materials must be in at least | | | | sold within a reasonable time frame. The days of |
| average condition - if they are in fair condition the item | | | | underwriters simply allowing for higher home loan |
| contributing to the "fair" condition must be repaired and | | | | values on a particular property due to the property |
| brought to average condition. | | | | being in a Home loan values can be the source of |
| Page 2 of the Appraisal | | | | much frustration for a potential homebuyer. However, |
| 1) Distance of Comps | | | | proper appraisal technique can make the process |
| · Urban - should be ½ mile or less | | | | simple. For more information regarding home loan |
| · Suburban - 1 mile or less (may be a little further | | | | values, appraisal key points, or residential financing go |
| depending on the area) | | | | to the caltexfundingresource site and search Brandi |
| · Rural - less than 10 miles | | | | Horton resource. |