On this page, you will find past newsletters in which we give advice to our customers about how to expedite their appraisal process. Be sure to check this page often for updates, or subscribe to our newsletter for other kinds of helpful articles.
Use the search feature below to find what you want to know.
KEEPING THE “FINAL” IN “FINAL INSPECTION”
by Stan Choate, Appraiser Tech / Valuation Associate
One of our common projects here at Spurgeon Appraisals is the “final inspection” of a recently constructed house. While lenders typically have us perform appraisals on a property before construction begins, they often need us to return to the property to determine whether construction is finished and whether the original plans have been followed. The result of this final inspection is the “completion certificate”, though it might be called by other names. Does that sound simple?
It rarely is. Very often we will send one of our appraisers to do a final inspection only to discover that the construction is not actually complete, which means we cannot do the completion certificate at that time. This requires us to make yet another inspection later, when the house is truly done. That extra inspection requires an extra travel fee, which neither the lender nor the home owner appreciate. This common problem wastes money for customers and wastes time for appraisers.
The root of this recurring problem is definitions. Words like “done” and “complete” are defined differently by the different parties involved in the new construction. For the appraiser looking to do a completion certificate, “done” means that every task listed at the beginning of the project has been completed, and every line on the blueprints has been translated into a tangible part of the home. But the home owner usually defines “done” differently. By “done”, he means that the home is now habitable. The kitchen cabinets might be sitting in the garage, and the deck may not be built—but he’s “done” with the house, because he is now able to live there.
To help avoid this misunderstanding and save our customers money, we advise lenders to ask their clients a few questions, before contacting the appraiser for a final inspection.
-Are there rooms that still need carpet, trim, or lights?
-In the kitchen, have all countertops and cabinets been installed?
-If the house has a second story, have all the walls and fixtures been installed up there?
-If the house is meant to have a finished basement, have all basement walls and fixtures been installed?
-Has all work been completed for garages, decks, and porches?
The professionals here at Spurgeon Appraisals care about providing quality appraisal work in a timely, affordable manner. Call us today to experience our top-notch service first-hand.
Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.
WHY WE ASK FOR THE CONTRACT
by Stan Choate, Appraisal Tech / Valuation Associate
Whenever we are hired to appraise real estate under contract for purchase, we always ask our client to provide a copy of the contract or the major details of the transaction, like sale price, closing date, and the parties involved. While most of our customers oblige us by sending the purchase contract or the major details, some have refused, delayed, or protested that we should not see the contract, for fear that it will compromise our unbiased, objective opinion of value. To allay the fears of such clients, we want to explain why we ask for a purchase contract and how we use it.
The first reason that we ask to see the purchase contract is that regulations require us to ask. The Uniform Standards of Professional Appraisal Practice (USPAP) require appraisers to investigate current listings, options, and purchase contracts, as well as past sales of the subject within three years of the effective date. Furthermore, USPAP requires us to make some statement about this research within the appraisal report itself. If our efforts to gain this sort of information are unsuccessful, we must report on the efforts we made.
Another reason that we ask to see the purchase contract—and probably the reason that USPAP requires us to ask—is that such information is instructive for the appraisal process. The contract price could, for example, help us to discover whether the market favored the seller or the buyer, once we compare the contract price to the listing price. Additionally, our job is to estimate the market value for the subject, in which case we must analyze all relevant data for the subject’s market. A negotiated, arms-length purchase agreement within that market is certainly relevant, though it is not the only relevant piece of data.
We certainly want our customers to know that the contract price will not be the determining factor for our appraised value. Not only would it look suspicious if our appraised values always corresponded to contract prices, but it would be an improper, unethical practice, and we care too much about our reputation for honest, diligent work. But that very desire to perform excellent work motivates us to ask for the purchase contract, so that we can comply with regulation and utilize all relevant data.
Spurgeon Appraisals has performed appraisal work for most of the lenders in our service area, and we frequently perform appraisals to help them make decisions about loans for prospective buyers. Contact us today to make use of our wide-ranging experience and dedicated customer service.