Understanding the real issue with Appraisers and energy upgrades?
As a Loan Officer the stereotypes would dictate that I am supposed to see all Appraisers as my nemesis. This is not really the case in any event but I really have to defend them here. Contrary to popular belief, Appraisers do not determine the value of a property, they provide an opinion of the current market value within specific guidelines and constraints. The underwriter is then charged with the responsibility of reviewing the Appraisal to ensure that all required guidelines where followed. If an Appraiser adds $10,000 for an updated Air Conditioning unit this will stand, provided that it is supported by the required process and guidelines. If the Appraiser did this outside of the required process it is the responsibility of the Underwriter to remove this adjustment.
Appraisals should not include political considerations nor societal agendas. They are supposed to be an objective opinion of value arrived at by available market data within the specific structures and guidelines.
If the market data shows that houses with a new Air Conditioning Unit are selling for $10,000 more the Appraiser should consider this in their valuation.
A good example of this has always been pools. I have been asked many times over the years how much value a pool adds. Only the recent sales in a specific neighborhood can answer that question. When an appraiser is working on a house with a pool, they must provide data that shows what the relative value of a pool is for that specific neighborhood based upon the relative sales prices of houses with and without pools.
The good news is that we have excellent and established financing mechanisms that don’t even require that the amounts included for energy upgrading that may be added to the buyers financing, be given any value in the appraisal.
Sacramento 1st DBA Comstock Mortgage – Lic : 01390474
Kevin Nunn – NMLS 305826 / DRE 01158674
