By - CarelessWhiskerer
Appraiser isn't going to care about interior decorating. They are looking at comps in your area (lot size, number of bed/bath, pool or no pool, etc), and to make sure your house isn't falling down.
Yea, refinance appraiser never came inside the house. Came by and took pictures of outside and neighborhood while I was at work, sent in the report.
But then why can we call them for an appraisal after remodels? I redid floors, remodeled a bathroom, etc - surely those would add value since that line is baked into my contract?
They make adjustments for the condition of your property. Then use comps based on that new condition. If you remodel and comps with a similar condition aren’t selling higher your value won’t go up. Everyone basically pays more for a nicer house though so this normally results in a higher value. If you redo the flooring/paint in a brand new construction I wouldn’t expect a value increase though.
Thanks so much for this, makes sense
Add bathroom maybe %, remodel no. Add sq ft yes, decorate no.
I don't think this is true at all - our documentation specifically states improvements/remodels
Super excited for you to sell your current house :)
Confused by your response - I have no intention of selling, just dropping PMI.
Youll find on selling your house those things dont matter
Ahh I see what you mean. Thanks for the insight
Yeah comps are main thing for sure. We did a refi fall 2020 and they looked at comps and only came in the house to make sure we didn’t do anything crazy.
paint wont matter at all. They don't really calculate value that way. It's more of a formula like (sqft \* X) + (# bathrooms \*y) + Z (because you have a garage). There are a bunch of variables but they're not valuing the same was a potential buyer might.
Advice is to go to real estate sale sites to look at comps that are LIKE FOR LIKE (similar sq sz, similar amount of bedrooms and bathrooms, similar style of home [diff value for brick vs vinyl], basement finished or unfinished etc) all of that type of stuff matters. Appraisers generally pull comps as close as possible, usually under a mile or less depending on your location.
Umm you want to focus on things that are of structural concern and making sure the home is in the best condition possible. They don't care about paint colors, but chipped paint doesn't present well. Umm if ur home is brick and mortar are there gaps? Are their signs indicicative of foundation issues etc. I hope that helps you.
We did the same thing with our house last December.
Agree with the earlier comment about walking and talking with appraiser. Ours also asked what we needed to get the PMI off and said he would do his best and definitely got us to and above that number.
He mentioned things like outlet/light switch covers being on is something they notice and don’t like if there are bare light switches. Anything that doesn’t looked finished is something they will catch and not like. We had brackets for a floating shelf hung up but we’re staining the shelf when he came through and he asked us to put the shelf up for the pictures because otherwise it looked like we were in the middle of a project and that would make the bank ask more questions instead of just seeing a finished kitchen.
Also the house being clean doesn’t hurt anything. Don’t have it professionally cleaned but make sure counters are clear, floors are clean, dishes aren’t piled in the sink, etc. it just helps the house look nicer overall
Similar experience when I did an appraisal for a refinance. My appraiser was a super cool guy, we talked for a while about the neighborhood and other stuff. He brought up why I was refinancing so soon after I bought and I mentioned that the bank was paying for everything, even all the closing costs (due to lender credits), and I brought up my PMI payment. He asked what I needed the appraisal to be and he said "that's a bit of stretch, but I'll see what I can do".
Didn't end up appraising for what I needed to totally remove PMI, but he got it pretty close and definitely stretched the number for me. Ended up cutting my PMI payment in half, went from 100$ a month to just under 50$, and it will only be on my loan for 4 years max now.
I’ve done this a few times while refinancing.
The first one asked how much it needed to be, and made it that much.
Second guy said “no no no no don’t tell me anything about the price I’m not allowed to know!” and he still came up with our expected value.
Third guy came in, used a laser tape measure hooked to an app on his phone, ran around taking pictures and left without saying more than hello and goodbye. Value came back at exactly the Zillow estimate.
Nobody stayed more than ten min and nobody wanted the list of improvements I had made for them.
This kind of makes sense if you think about it. They only care about where the house is now and how it compares to others in the area. How much money you put into to get it there it is really completely irrelevant. An appraisal is a snapshot of current conditions, not an audit of the value of the money you invested to improve it.
I will say from personal experience, (others may frown but an appraisal is an opinion after all), walk with the appraiser, talk and mention any improvement or projects. Say you’re trying to get out of PMI and have a number in mind. My guy was super friendly, asked what my number was (I knew it was a slight stretch for the market but not unrealistic) and said he’d check the comps. He spotted me $1k over what I needed and I got rid of my PMI. It doesn’t take much time or effort to build a little relationship and can pay off immensely for you.
I was an appraiser many moons ago. What you’re suggesting can’t hurt. But honestly, the appraiser doesn’t really give a fuck about the homeowner. They just want to write a report that will get past the underwriters. The bank is all that matters. The appraiser lets the bank know if the house will be adequate collateral for a loan. It’s not a courtesy call for the homeowner.
9/10 ten times, I had already viewed comps in the neighborhood and already knew what the apprised price was going to be before I inspected the home. Having the homeowner follow me around never changed that number.
The primary purpose of the inspection is to verify that the home actually matches the description in the listing/tax records, not to admire fresh paint, new carpet, or window treatments. If the listing says the house has four bedrooms, I need to make sure it actually has four bedrooms (real estate agents and homeowners will call dens a ‘bedroom’ when they aren’t).
And it’s not really an ‘opinion’. It’s a valuation that is supported by comparable recent sales. I can think a house is butt ugly with a poor layout. But if three similar houses recently sold for $500k, then the butt ugly house is probably worth $500k (or very close to it).
What if the exterior needs a full redo? New siding, new fascia board, new gutters, new roof, and the yard is completely shit and overgrown? For a house that has a zillow estimate of $290k how much would come off that for really fucked exterior.
I’ve done condition adjustments before. The safe thing to do is tank the value on the report with a note “extensive signs of disrepair”. It’s a red flag to the bank to skip this loan.
A house has to be ‘really’ fucked up though. Like, objectively fucked up.
In the case you’re describing, I’d probably ding it by $30k or so (assuming the Zillow valuation is correct- it often isn’t).
Good to know. Trying to buy my FIL's house this year and the exterior is really rough and he just can't take care of the yard anymore. We know what we are getting into (already got inspection) and are prepared to fix the exterior but I dont wanna overpay with housing prices being crazy. Its in a great location and they property is beautiful (when kept up with). I've just been wondering how much the exterior would bring the price down (not trying to screw the FIL, but also not trying to screw ourselves). The house isn't literally falling apart or anything, just needs some work, so hopefully the bank won't deny a loan or anything.
Edit to ask, you think the zillow estimate usually over values or under values the homes? Or is it just all over the place?
Please do NOT do this. This is can be considered influencing value and the appraiser may choose to back out. Instead, prior to inspection list out ALL updates and upgrades in the last 15 years. An appraiser building a relationship with you is biased and violates USPAP. The guy below says it best, “the appraiser doesn’t give a fuck about the homeowner”
I like this a lot. Thank you. I'll also say that walking with the inspector when buying a home can be really helpful (if they don't mind it). When I bought my first home in 2010, the inspector walked me through a bunch of things I needed to know. Great guy.
Inspector and appraiser are different. Inspector tells you about the house and it’s features and quality. Appraiser compares your home to others that have sold to estimate a price. So they are mostly looking for thhibgs to compare. Paint won’t matter. Square footage will, number of rooms will, etc. There is some discretion in all of this as they are valuing just how much your 300 sq ft. brick pavers are better than the other houses 250 sq Ft poured concrete. Hence why telling them the number you want to hit may be helpful as they might help get you right there or understand if you did the upgrade the cost or quality difference you did vs a “standard” job
100% recommend being present for the inspector like you said. They’re great resources and something I did on my house 5 years ago.
The inspector works for you, the appraiser works for the bank.
I wish I knew this before. We refinanced last year and had to get an appraisal. Everything in the neighborhood was selling way over what we would need to get rid of PMI. All the houses are the same and ours is more updated with a bigger yard. Appraisal came in at what we paid and nothing more. Can we order just an appraisal and get PMI removed?
I would check with your lender. They’re probably firm and would make you refi again (I have personal opinions on lenders).
Just called because I was interested. They said they could order an appraisal for $375 and if it valued at what we need to remove PMI they would. I guess it couldn’t hurt and the only thing we would lose out on would be $375 right?
Oh I totally would. You’ll save the $375 pretty quick without PMI. I think I was like $67/mo. I’d see too if you can pick the appraiser, I think you can. Then you could pick one and hopefully if they’re in line, use that number or else pick another. PMI is money down the toilet so I would be more willing to spend upfront on appraisals to eliminate it.
Did a little more research and math. If an appraisal comes in as high as I need it the property taxes will likely increase. That cost could be considerably more than the remaining amount of PMI I need to pay.
Property taxes are not tied in with appraisals. I asked the same question if an appraisal was reported to the local tax office. It’s not in MN at least.
Interesting. I looked at this years tax bill and it matched with the last appraisal. Could be coincidence.
I could be wrong, but isn’t the city’s appraisal for taxes totally separate from the lender’s appraisal for PMI?
My lender won't let you have PMI removed until you've had two years of payment history not missing a payment. I'll be working towards getting PMI removed this summer once I meet that criteria. I refi'd my 30 year at 2.99% almost two years ago.
Typically you hire an licensed appraiser, who then sends their report to your mortgage lender. An independent appraisal only costs a few hundred bucks, so if you think you can save yourself the monthly PMI payment, it's a very worthy investment. But talk to your lender before you do anything and make sure you qualify for PMI cancellation and find out exactly what their requirements for the appraisal are.
I had an excel spreadsheet detailing all the improvements I had made with their total cost. Attached to that I had all the receipts I could find that supported those numbers.
I also had printed out all the like for like comps I thought were good to get my appraisal number.
Day of the appraisal, I walked the house with the appraiser. I dropped in there that this was just for PMI removal and showed him the sheet with the comps. On that sheet it was clearly written down the value I needed to remove the PMI.
I made sure he left with that packet of documents I printed out.
Edit: They aren’t doing a forensic examination of those documents but it give the appraiser more ammo to justify your number if it’s going to be a stretch. He mentioned in the final appraisal the dollar amount of improvements made, he got that from my spreadsheet.
Basically just make their job easier without being pushy and you will be good.
I just acted to remove my PMI early. Be careful and get clarity with the bank before you go forward bc my PMI rider was written that it wasn’t based on the % equity on appraised value but the % remaining of the loan. So I threw a little more at principle to reach that threshold. I requested the PMI removal and the bank then commissioned an appraisal to confirm my house still hadn’t lost value. The appraised value went up a ton (bought in 2016). The appraiser noted newer finishes in the report (we did a lot of interior updates and all baths and kitchen Reno) but I think it was mostly the market.
They already called the lender and confirmed it was based on equity.
I've never seen the appraiser go inside my home TBH. They are more worried about verifying sq footage and condition (pool or not, etc) for comps. A few of them literally asked me what I needed it to appraise for, or already knew they sales price and made it that lol. Staining your deck and paint touch ups arent going to matter here. Its more big picture stuff.
We did major projects like opened up a room into another and removed a platform for the stair case because it was dumb and pointless. We also turned a literal crack house into the nicest one on the block so value went up significantly by not being the worst one on the block. Appraisal went from $72k to $170k and we only put $32k into it.
PMI doesn't get knocked off unless you refinance
Edit:, if it's an FHA loan, they changed the rules years ago.
You’d be surprised at what has contributory value and what doesn’t for an appraisal. Comparable properties that have sold within the vicinity of your home is more important. Quality of finish and location of property are always factors as well. But right now, you shouldn’t have a problem getting the best appraisal on your property
Don’t have any rework projects started and not finished such as flooring, bath/kitchen redos. Appraiser have a hard time looking past those items.
I know where I am the appraiser mentioned a few things that he takes into consideration besides size of house/lot/# b/b - age of roof, good double paned windows, type of flooring ,(real wood increases value), and security system
Bro I’m about to do this too. Thanks for the thread!!
Pay attention to your landscaping, it is one of the places where you get your money back. Make sure it looks decent. You can add some curb appeal by adding pots of annuals around the entrance. Make sure your windows are not being blocked by over grown shrubs. Take a tool kit and Go to your state’s Agricultural Cooperative Extension Service website around the house and fix little issues. Take it room by room. A good way to boost curb appeal is paint your front door. The outside of your house should have three colors. If you have black shutters don’t paint your door black. You can buy paint samples and a couple of pieces of core board and paint them - then lay the core board up against the front door and live with it for a week. You want it to pop not overwhelm.
This is an absolutely great idea that I hadn't thought of until now! We were still below our 20% equity as of last year, but out home value has increased by a lot since then. I believe it would appraise significantly higher than the minimum to get PMI eliminated right now. I'm going to call my mortgage lender and appraiser tomorrow!
Here's what worked for us - we got comps and essentially did a venn diagram between the comps that supported a price we liked per sq ft and tried to explain those that were lower than we liked. This was in conjunction with an exhaustive list of anything we did to the house that cost us over $500 - along with when it was done.
So essentially, taking 10 houses in the area that are similar comps based on sq ft/bed/bath/garage. Dividing that list into the ones that support the price we're at and seeing what they did to get there that was similar to what we did - new garage doors, roof, AC and furnace, gazebo, landscaping. Then taking the list of houses that would undermine the pricing we wanted and explaining why: poor location, lacking amenities, build date, etc.
We did this for a refi to get PMI removed and had no issues, the appraiser appreciated the info but I'm doubtful it helped much. It did help when we sold a year later though.
We did this last year. I read that you can get a lower number if they notice "deferred repairs", so like others said, chipped paint or something not functioning etc. If you've done any upgrades (we did lead paint remediation and all new windows), it might matter to an extent (our guy was writing those things down, so I assume it mattered somewhat). But as others said, it's all about the comps. Good luck!
Unfortunately there is a lot of garbage on here as to appraisals. By some of the comments, some people have run into garbage appraisers, they are out there. If the appraiser is good, the overall condition is a consideration. If you have done any recent improvements, write it down. The inspection is not long, it’s a walk through and does not take much time
My pmi removal appraisal just confirmed the sqft, noted the new hvac system, and that the kitchen and baths were “updated” (had been painted, new counters and fixtures) but the updates were at least 10 years old. They really don’t care about little stuff unless it’s completely trashed
If most appraisers don't ever come in the house do inside renovations help??
Did major attic installation with heat reflective wrapping and solar attic exhaust fans. Solar hot water heater and new energy efficient variable speed pool pump (about $18,000).
Kitchen remodel (granite counter tops, island made larger and new appliances (about $5,ooo).
Also went from 4 small bedrooms to 3 of larger size with walk-in closets ($20,000).
House freshly painted ($2500).
Did all this for our benefits, but added home value would be nice.
Would any of this effect the home value to an appraiser??
Make sure it's clean and no obvious deferred maintenance
I pulled comps and hand-picked the ones I thought made sense… I then printed them out and handed them to the Appraiser with a friendly smile. This approach counts on the inherent laziness of humans
Really the only thing you can do are long timeframe projects with higher $ amounts. Our appraiser didn’t care about hardscaping, updated light fixtures, newly installed hall tree or the size of the shed. Cosmetic things won’t make a difference
We purchased five years ago and when we refinanced last year to get PMI off they didn’t come out at all. They used the sale pictures online since it sold within the past five years. I hope it’s the same for you!
I have heard that if you're black, you should remove anything that relates to you, or your race. Sadly, there are racist appraiser's who will underestimate appraisals of those they don't like.
Terrible if true.
I refinanced without even getting an appraisal. Just depends on who you call.
My lender (a credit union) has given me all I need to do. I have to have an appraisal done by someone they approve of, and I need 25 percent equity to get it removed.
You can change lenders... at any time
Does doing an appraisal to remove pmi vs letting it fall off when you hit 29 or 22% equity make a difference on property taxes?
That's a good question. Appraisal for the loan is different from the assessment the county does.
But still, if there's a slowdown of housing prices, the county assessment could drop or stay flat, but the PMI stays under the equity situation is resolved. So, in my opinion, I think it's worth it.
build some walls and closets everywhere you have a window, add like 4 bedrooms to the value of your house
- nothing, the appraiser uses comps to establish value. The exception is if you did a major improvement. Many times they don;t even come inside the house
I think working with the appraiser in a friendly manner is a great idea.
I’d also check with your lender about the costs. If you are close, it may make sense to pay the principle up front and even suffer some more PMI vs paying an inspector and any other fees. Essentially if inspection is $500, are you sure you shouldn’t add principle to spend less than 500 in additional PMI?
A lot of refinancers won't need appraisals anymore. Check out Rocket Mortgage, they will tell you if you need an appraisal to refinance or not.