Sidney Cumming, AACI, P.App, CPPA
AccuPro Appraisal & Consulting
Mark – What does an appraiser do?
Sid – We’re going to be talking about residential real estate today, so what we do is we come in and we determine what the property is worth. When we do that, we come in, we measure it up, we do an inspection, and this is for valuation purposes. This isn’t a property inspection for mold or structure, we look at it purely for valuation purposes, and then we determine the value.
Mark – What’s the difference between a realtors assessment, you get a property tax assessment, and your appraisal. They’re 3, what’s the difference between them?
Sid – so the realtors evaluation basically is most commonly used for determining what a property should be listed at,
The difference I say is Evaluation, Assessment, and Appraisal, or Valuation, an evaluation, yes, so basically you’re wanting to find out what you’re competing against, and what’s recently sold, so you can accurately as possible market the property so it sells in a reasonable amount of time.
The city does an assessment, that is purely for taxation purposes, you’ve already done an episode on that, you interviewed Kathy, she talked about how it’s the value as of the year prior, basically that determines the value using mass appraisal techniques, to tax property taxes.
The third is what we specialize in, which is and appraisal, which is also called valuations, and ours are certified and they’re used for the banks, if you’re financing an you’re purchasing a property, they’re used by courts, estates, divorce, you’re transferring, anything where you need to know the exact number and there’s a signature and a seal behind it.
Mark – So in a regular real estate transaction, at what point does an appraisal come in?
Sid – Basically what happens in a lot of cases, is the purchaser will make a purchase agreement, and they will make it subject to financing, the bank will then hire an appraiser to do determine what the value of property is, to make sure there is enough collateral there and that the purchase price is accurate. Now what I recommend is the earlier in the process, the better. So if you’re selling your property, get the appraisal done, then you know what the value is, you know what you’re marketing at, and you can sell it in a reasonable amount of time. And you eliminate the tire kickers, because you can say, here’s what the property’s worth, and then it eliminates a whole bunch of guessing, and you know you’re getting your top dollar. As you move later in the process, if you’re a purchaser, and you order the appraisal, if it comes in higher, you don’t need to disclose that, you can use that to your advantage, if it comes in lower, you can use it as a negotiation tactic.
Mark – so I have $30,000 to spend, so I want to spend it on my house, so how should I spend it, do I want redo the basement, or do I want to redo my kitchen – or how or where – for the best return on the money I put in?
Sid – so every property is unique, so we do is, we walk into a home normally, we offer it as a service, and we look at the home. So an example is if the kitchen cabinets are in really good shape, but they just need a coat of paint, it’s cheap, we recommend doing stuff like that. Now if the cabinets or the carpets are hideous, then that could be a really good return on investment, then you put something in, then you also want to think is this something where I’m looking for wear and tear and it’s a rental property, or is this something where I’m in a higher end house and you want some nice counter tops… when a person walks in, that first 30 seconds you want to really grab them. So kitchens, bathrooms, but you can spend a lot of money on a kitchen or a bathroom so you want to be careful and make sure it’s money well spent.
Mark – so say I have a client, and my client says, my paint doesn’t look that great, but I’m going to paint it after, because what if I paint it white or something, and then the buyer doesn’t want it white, maybe they want it blue or something like that, so carpet, same kind of thing, the carpets kind of rough, but you know what, they’re just going to replace it when the buyer actually makes the offer, is that the best approach, or what do you think?
Sid – It can be, you want the property to be as marketable as possible. So if it’s really bad, and it doesn’t cost a lot of money, clean it up, fix it, make the property show well, you’re competing against… we’re in a market place right now where there’s lots to choose from, You want to make your property stand out, you want to make it pop, so it might be hiring someone to come and deal with some areas, it might be replacing some flooring, but you want to make it marketable without spending a huge dollar.