Video Transcript: Inside the Mind of an Appraiser
Stacey: Ever wonder what goes on inside the mind of an appraiser? Well let's find out on "What Works Now"
Voice Over: AOL and Bank of America Home Loans – helping you find out what works now.
Narrator: Meet Paul Isolda, an appraiser with 22 years in the business. Let's tag along and see what the appraisal process is like from his point of view.
Stacey: So what's more important to you, is it the condition of everything, or the amenities that are in the room?
Paul: Well I'm looking at both the condition and the amenities. Buyers like to see a house that's well kept and ready to move into.
Stacey: So what can a seller do to boost the appraisal of his home?
Paul: Well, as an appraiser, I'm looking through the eyes of the typical buyer. So, what buyers are looking for – and this is an excellent example – is a modern kitchen. And this would be an excellent way to increase the value of the home.
Stacey: So what in this kitchen do you actually like and is adding value to the appraisal?
Paul: Well, absolutely, these granite countertops look very nice, and these are the kinds of things that buyers are looking for. It also looks like there is custom cabinetry here, and I see a nice glass tile backsplash. It's hard to say, on a percentage, how a kitchen or bath or any type of renovation is going to affect the value of the property. It really depends on the neighborhood. You don't want to be the best house on the block – your neighbors are pulling your value down. You'd actually prefer to be the worst house on the block, because your neighbors are going to pull your value up. If you overspend on a renovation, you're much less likely to recoup that investment on the market. If you spend wisely and improve your property to what's normal for that neighborhood, you're likely – particularly with kitchens and baths – to recoup your investment, and often more. The biggest problems I run into are homes that really have not been kept up-lack of maintenance, lack of modernization. I've been in homes that look like there hasn't been an open can of paint in there for 20 years. That is a turn off for any buyer, and it's a turn off for me as the appraiser.
Narrator: Once the appraisal is completed, it's sent to the lender for review. Now that figure can make--or break--a sale.
Paul: As a homeowner, anytime there's an appraiser coming to your property or a property that you're involved with, it's probably a good idea for you to ask them if they're familiar with that neighborhood. Do they have geographic competence? And if they don't, then the homeowner should be calling the lender and saying "I think the wrong appraiser is coming to look at my property. They really don't know the area." Because the appraisal can put an end to a purchase transaction. There are different options that arise when the appraisal comes in less than what the contract price is: the buyer can take money out of their pocket and make up the difference; they can go back to the seller and renegotiate the price; or they can walk away from the deal.
Stacey: Alright, so is that it?
Paul: That's it. Just keep in mind that my job, as the appraiser, is to look though the eyes of the typical buyer. If it's good for the typical buyer, it's going to be good for the appraisal.
Stacey: OK, thank you Paul. So there you have it. If you need an appraisal, now you know what to expect and what to do to raise the value of your home.
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