Photograph by Kathy De La Torre
George Miller appraises homes in Saratoga. He also lectures on real estate at West Valley College and has authored books on the subject.
Appraiser can determine home value
By Jean Newton
What's your home worth? That's a question most homeowners want to know, especially when they are getting ready to sell or refinance their home. Talking to neighbors and keeping track of the sale prices of homes in your neighborhood might give you a general idea of the worth of your home, but one sure way to find out the true value is to get a certified appraisal from a licensed appraiser.
As a trained, impartial third party in the lending process, the appraiser's job is to determine the value of real estate by gathering, analyzing and applying information. Appraisers are guided by the Uniform Standards of Professional Appraisal Practice (USPAP) and must follow stringent regulations at both the federal and state level. The highest level of certification is a general appraiser who is licensed for both commercial and residential property.
"An appraiser is charged with a responsibility to evaluate all the information and then back that up with reason. One of the most important aspects is objectivity," said certified general appraiser George Miller of George H. Miller Associates in Saratoga. "There are many variables to take into consideration when determining the value of real estate, including location, utility and the current market situation."
Miller is well known in the industry as an expert on the subject. He is the author of two books, California Real Estate Appraisal and Residential Real Estate Appraisal, published by Prentice Hall and widely used in California and at the national level as textbooks in college and real estate classes. The former head of the real estate department at West Valley College, Miller still lectures there in the evenings, in addition to running an appraisal office in Saratoga with his partner, Gretchen Walsh, a certified real estate appraiser and Los Gatos resident.
"I'd call him the guru of appraisers," said Katy Gallagher, a former appraiser and co-worker, who is now a full-time licensed Realtor with Coldwell Banker. "He is the expert for disputes and often serves as an expert witness in court."
Miller is also a specialist in unique appraisals, ranging from mudslides to divorce cases, said Gallagher. Besides determining real estate value for buying and selling homes, appraisers can be hired directly to provide appraisals for other purposes, such as financial statements, loans, tax purposes, or business valuations. However, homeowners most often work through their Realtor, or lender, during the appraisal process when selling or buying a home.
Gallagher believes the appraiser's role is a critical one in the lending process and experience is an essential ingredient when evaluating the real estate market as it constantly changes. "My background in the appraisal industry has helped so much in the real estate business since I'm able to help my clients understand the process," said Gallagher.
One of the first things a homeowner should know is that there are several different kinds of appraisals. Desk appraisals are based on comparable sales in the neighborhood and other criteria, but do not require a visual inspection. Drive-by appraisals can be used for home equity loan valuations and rely on other sources, such as the multiple listing service to provide information on the characteristics of a home. A full appraisal gives homeowners the most extensive evaluation.
When you get a certified appraisal from a licensed appraiser your home will be subjected to a checklist set of standards and judged by certain criteria to determine its worth.
"In addition to a visual inspection, appraisers analyze market data using comparable sales, current offers, and pending sales," said Miller, who has more than 30 year experience as an independent appraiser. "We take into consideration the climate of the current market and may need to make an adjustment for time depending on when comparable houses were sold."
During a complete appraisal, the appraiser will come to your home to do a visual inspection and measure the square footage of the house. Generally the square footage is determined by measuring the exterior of the home and does not include nonliving areas, such as garages or covered porches. The appraiser will document the condition of the interior and note any deficiencies or improvements.
"The homeowner should be handy to answer questions and be helpful during the inspection since the appraiser many not be able to see all the improvements," said Miller. "For instance if it's a new house, it's probably compliant with Title 24 and has double pane windows and insulation, but if it's an old house you want to know if there have been any upgrades that you can't see, like insulation."
Miller said it is important for the appraiser to know when the house was built and whether there are any additions. If there are additions, the appraiser wants to know whether the homeowner obtained the proper permits. Other items he takes note of during an appraisal are the physical characteristics and condition of the home, as well as the site and location, including what schools serve the neighborhood.
"The value of the home is very much related to the property and its location," said Miller. "As an example, houses may be across the street from one another, but if the occupants attend different schools that could affect the value," he said.
Market fluctuations also affect valuation and appraisers need to be on top of the changes so they can make adjustments," Miller said. "As the market cools and inventory is a bit higher, there aren't as many multiple offers. We need to make adjustments for the market condition and using "comps," comparable sales, becomes a factor. Appraisers really reflect the current market, so knowing how to evaluate the comps is an extremely important part of our process," Miller said.
Taking photographs at the site also helps document the property for the appraisal report. Miller said appraisers often use digital cameras to take photographs of the outside, both front and backyard, as well as a street scene view. Sometimes the appraiser will take photographs inside the house of the kitchen or living area. The appraiser prepares three copies of his report for the lender. By law the homeowner is entitled to a copy if requested in writing from the lender. Homeowners who are dissatisfied with any information contained in the appraisal report are advised to contact their lender.
Although there is no expiration date on an appraisal, most lenders consider them outdated after six months. Appraisal costs can range from $300 for a tract single-family home to $3,000, or more, for a more complex, or high-end, property. Commercial and industrial properties range from $3,000 to $10,000.
"Appraisers do the best they can and they can't please everyone. Sometimes the seller wants the valuation to be higher and the buyer wants it to be lower. The main thing is to treat the subject property as fairly as possible," said Miller.
For more information on the appraisal industry, check out www.appraisalinstitute.org, or ask your Realtor for details about the appraisal process and how it relates to your real estate transaction.
Saratoga, California Since 1955
