100 South Dawes Street, Apartment D, Kennewick, WA 99336 Condominium For Sale | MLS# 251090 | $275,000. Built in 2009, this 1258... Read More
Challenges When Appraising Custom Homes in Tri Cities Washington
What Home Appraisal Entails
The job of an appraiser is difficult to begin with. By simply looking through a property and documenting its many features, the appraiser has to then formulate an opinion on what an average buyer who is unknown to the appraiser might be willing to pay for the property. This is done as a function of other similar homes in the area and the various modifications the home owner has made to the property. For a heavily-modified home in an area where not many homes compare, that can be an extremely difficult task.
Now think about taking away the home entirely from the process. When someone thinks of an appraiser, they often think of a person with a clip board roaming around a property making notes. For a custom home appraisal, the home is often not even built yet, leaving a real estate appraiser with only design plans and homes in the area to formulate what an average buyer might pay for the property.
A Deeper Review
Home appraisers on custom home jobs must go a little bit deeper in how they forecast value for a property. Not only are the number of bedrooms or bathrooms important, but so too is the type of wood used in the property, the planned fixtures for the kitchen and the desirability of the area. Custom homes are often built with at least a few flourishes involved, leaving an appraiser with the task of dissecting those flourishes into dollars and cents.
Comparing homes to a simple blueprint can also be difficult as the features of a home usually reveal themselves during a simple walk-through. Though a real estate appraiser can read that a home will have two bedrooms, seeing how those bedrooms are completed and the kind of square footage that is actually effective can color an appraiser’s forecast. That is simply not possible on a custom home appraisal job.
Where You Come In
With all of that being said about how difficult the appraiser’s job is, yours might be much more difficult in getting an appraiser to see subjective value in mere plans for a newly built home. Many times, an appraisal is necessary before a bank will issue a loan to begin construction, so getting every ounce of value out of your property’s design plan can help you get a better loan or even get approved in the first place.
Be familiar with the way your appraiser must go about forecasting value for a planned custom home. Your home builder will probably have a working relationship with at least one real estate appraiser, so making sure that your home builder gets involved in the process is a strong step towards ensuring a favorable appraisal. Also, make sure that you are up front with your bank about your home and don’t embellish on the property’s features. A big disparity in the loan amount and the appraised value can raise questions about the project.
An appraisal can sometimes be a nail-biting time full of mystery about what the home might appraise for and frustration if the number doesn’t come in as it should. Even with the number you want, a bank can always offer a lower price for your loan amount based on the bank’s own take on the appraisal and other conditions surrounding the soon-to-be home. Take all of these traits in stride as the dream of building a custom home is worth the troubles it sometimes takes to get there.
Your appraiser has the difficult job of forecasting demand and what a buyer might pay for a home that has not even been built yet. Understanding that and understanding that other homes in the area will likely drive your price will help you get a better grasp on the appraisal process and perhaps save your nails from too much biting.
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