Understanding how to work effectively with an appraiser can help ensure a smoother transaction process and accurate property valuations. Below are key best practices to guide Realtors when preparing for and supporting an appraisal:
1. Meet the Appraiser at the Subject Property
Whenever possible, meet the appraiser at the property. Being present allows you to provide additional context about the property and answer any questions the appraiser might have.
2. Prepare the Property as You Would for an Open House
Ensure the property is clean, organized, and presentable. A well-prepared property leaves a positive impression and can subtly influence the appraisal process.
3. Provide a List of Upgrades and Renovations
Compile a detailed list of all upgrades and renovations completed by the current owner. Include dates and costs to help the appraiser understand the added value these improvements bring to the property.
4. Share Relevant Comparable Sales
Offer a list of comparable sales and listings that support the contract price. Include notes about the comparables, such as unique features or conditions that may not be immediately
apparent in MLS data. Avoid providing RPR reports, as these are not widely accepted by appraisers.
apparent in MLS data. Avoid providing RPR reports, as these are not widely accepted by appraisers.
5. Offer Additional Documentation
If available, share floor plans, HOA information, ground rent details, and the contact information for condominium associations. Include descriptions of any amenities and services provided by these entities.
6. Understand the Definition of Market Value
Market value is defined as the most probable price a property should bring in a competitive and open market, under fair conditions, where both buyer and seller are well-informed and not under undue pressure. It’s essential to recognize that market value may not align with the highest offer price.
7. Respect the Role of the Appraiser
The appraiser’s primary responsibility is to protect the lender by determining the fair market value of the property. They report the true condition of the property and ensure it meets the lender’s requirements. Remember, their role is not to validate the contract price but to ensure the value aligns with market conditions.
8. Prepare for Potential Outcomes
In cases where the appraised value is below the contract price and the buyer lacks the funds to cover the gap, Realtors should guide their clients through the next steps. This may include renegotiating the price or completing a Reconsideration of Value by addressing errors or deficiencies in the appraisal report—not by attacking the appraiser personally.
9. Use a Maryland Licensed Appraiser
Always insist on using a Maryland-licensed appraiser to complete the appraisal report. This ensures the appraiser has the required qualifications and is in compliance with state regulations, safeguarding the integrity of the appraisal process.
10. Educate Clients on Improvements
Not all property improvements contribute to market value. Clients should consider both the enjoyment of improvements and their potential return on investment. For example, while cosmetic upgrades may enhance appeal, structural or system upgrades often have a more substantial impact on value.
Final Thoughts
Working collaboratively with appraisers and understanding their role can significantly influence the success of a real estate transaction. By being proactive, prepared, and professional, Realtors can foster a more seamless process and ensure accurate property valuations that benefit all parties involved.
