Their walk-through and documentation of the wine country real estate property will serve as the basis for their research to find three to six active, under contract and sold comparable sales that are in the immediate neighborhood as close to the subject property as possible. Appraisers will not inspect or check any elements in the house, and they will not walk on the roof. If they observe something of concern, they will note it on the appraisal, such as a stain on the ceiling, tree limb on a roof or potentially a leaning fence.
An appraiser holds a state issued license based on completing coursework and passing exams to become licensed. Depending on the state, they must work under a more experienced appraiser for a designated length of time before they can go completely on their own. There are different levels of appraisers based on their experience levels. Things that could be noted also depend on the kind of loan being done. If the loan is Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA,) they will closely scrutinize these kinds of things compared to a conventional mortgage.
The appraiser will need an MLS sheet, tax record, any floor plan or survey documents as well as a list of improvements and upgrades that have been done to the Napa real estate property. The listing agent can provide all of this to the appraiser before their visit. The more information the better. The goal is to make it as easy for the appraiser as possible. They are typically running from appointment to appointment each day and inside numerous properties, and this helps make sure they have a handy reference and won’t omit anything.
It’s important for a seller to understand that not everything that they’ve put into their wine country real estate home, no matter how extensive or exquisite, will be given substantial value in the eyes of an appraiser. It’s critical to remember that an appraiser will never give value equivalent to the cost of each component in a home. The seller might have spent $20 per square foot on wood floors, but an appraiser might not give any more in value to these than a home that has $8 per square foot wood floors or even wood tile. The fancy marble counter tops might not add any extra value when comparing this to a home that has quartz or even granite counters. Pools are especially subjective, and just because a seller spent $150,000 on a lagoon style pool with grotto, bar, water slide, etc., does not mean an appraiser will see it that way as far as how much the pool is worth appraisal-wise. Certain things will not add extra value at all, such as a newer roof or home air conditioner and ventilation system, but they will help the home sell faster and for a stronger price. Pool screens, epoxy flooring or cabinets in the garage, while pricey to install, will not inherently increase the value of a home on an appraisal.
Real estate: It’s complicated. And when it comes down to which comparable properties to use on the appraisal report, it can be anyone’s best guess. Fingers crossed, but this is where it can get subjective. It is important to remember that an appraisal is defined as an art and not a science. Therefore, the comparable properties that one appraiser uses might not be the same as another. Don’t expect an appraiser to necessarily include wine country real estate properties in an adjoining neighborhood or area that sold for higher prices to justify a seller’s contract sale price if there are lower-priced comparables that are suitable in the subject property’s immediate neighborhood. Cash sales might not be used when the subject property is being financed. An appraiser cannot give huge adjustments to make the subject like the comparables due to lending guidelines that dictate limits on the maximum percentage of adjustments that can be made.
In other words, don’t expect an appraiser to take a 3,000-square-foot Napa real estate home and adjust it to the subject property that is 2,400 square feet. Appraisers are going to try to use the most recent comparable sales available, and those most like the subject in size. This might be disappointing for sellers who were banking on that record-breaking sale from six months ago to be incorporated when there have been several recent sales that closed for less. If the home is in a neighborhood where there are higher new construction sales, the appraiser will most likely stick to resales that could have lower prices.
The market might want to pay more for a home, but when there is financing involved, it’s rare that a buyer will want to pay over the appraised value. When there is a shortfall between contract sales price and appraised value, no matter how exceptional or nice the home is, there is less confidence about the purchase. If the home is in an area that tends to have a lot of first-time, FHA or VA buyers for example, and there are concessions being given by sellers, such as closing costs, the appraised value might come in less. Concessions are not viewed as the true sales price of a property, so the appraiser will discount them when determining the real price. In many neighborhoods where this happens, the values want to increase, but appraisals often hold prices back a bit, simply due to the dynamics of most Napa real estate buyers in the neighborhood needing financing that requires an appraisal.