Though we’ve previously discussed best practices for appraisals, as well as best practices for pre-sale inspections, there’s still more to be said about the appraisal process and making sure that it goes off without a hitch. In investing, the appraisal process is crucial to ensuring that you’re getting the most out of the work that you’ve put into your properties. It’s also a process that a lot of people assume will be fast and easy, but oftentimes, it can be time-consuming and burdensome. Here’s some more advice on avoiding common pitfalls in the appraisal process!
Get to Know Your Appraiser
We mentioned this in our previous appraisal piece, but we cannot stress the importance of getting to know your appraiser enough. Building personal rapport can help in several areas, including in scheduling. Beyond that though, it’s very important to understand your appraiser’s background, familiarity with the area in which your property is located, and overall level of expertise. An inexperienced appraiser, or an appraiser who is not familiar with the geographical area, can mean inaccurate valuations — either falsely inflating the price of a home, or undervaluing it.
It’s also important to note that, despite the relationship that you may have with an appraiser, it is not wise to pressure an appraiser for a higher valuation. While this is a rare occurrence, it’s worth mentioning that doing so will not likely succeed in the long run as inflated appraisals typically do not stand up to scrutiny of third-party review. On that note, it’s important to know what a property is worth — sometimes, this conflicts with estimates that show up on real estate sites like Zillow.
Schedule Your Appraiser in Advance
This should go without saying, but appraisers are very busy people. It is not wise to call an appraiser hoping to schedule them within the same day or week. Rather, it’s best to ask what their availability looks like and ensure that their timeline matches up with yours. Sometimes, you may not be given a choice in who your appraiser is, in which case your timeline may be completely dependent on theirs which is a difficult situation for anyone to be in. With that in mind, it’s best to get ahead of the process and try to schedule someone with as much advance notice as possible.
Don’t Leave Your Tenants in the Dark
If you’re getting an appraisal for a rental property — especially one that’s occupied — it’s important to communicate with your tenants to ensure that the process goes smoothly. If a tenant is not given proper notice, for example, they may decline the appraiser’s request to enter the premises, and they’re completely within their rights to do so. Some tenants may prefer to be home during the process, while others would prefer to be away from the unit. Make sure your scheduling is not only in line with what’s realistic for the appraiser, but also what’s acceptable to your tenants. Nobody likes to be surprised by a visitor to their home, especially one who is going to be taking a lot of pictures and taking notes.
Of course, the global COVID pandemic has compounded scheduling difficulties. If a tenant is quarantining because they’re experiencing COVID symptoms, it’s important to know this and to take it into consideration. If a tenant begins experiencing symptoms after an appraisal is scheduled, it’s important to get this information in advance and reschedule, rather than find out on the day of and have to schedule the appraisal even further out as a result.
When you reach out to your tenants to schedule the appraisal, it’s also worth explaining why the appraisal is happening. While there may not be a legal requirement to do this, it’s generally a good idea to assuage any concerns that tenants may have about their existing leases and whether or not they’re going to have to pick up and move on short notice.
Mind Your Zoning Regulations
In order to ensure that the appraisal goes through flawlessly, it’s important to make sure that the property being appraised matches requirements for the type of property that it’s zoned for. For example, a property owner should never assert that a property is being used as a residence when, upon arrival, it’s clear to an appraiser that there is signage indicative of a commercial enterprise. Likewise, if a property is zoned as a single family home, then it should be used as a single family home, rather than be occupied by two unrelated families with separate kitchens, electric meters, and entrances to the home.
A lot of this advice should go without saying, but reality is that some real estate investors underestimate the difficulties of scheduling appraisals — even those that are experienced in the business. As an investor, it’s important to be prepared for all situations, keep clear lines of communication with all interested parties, and ensure that you’re doing your due diligence with even the smallest details to maximize your return and enjoy the fruits of your labor.