Publication Date: Friday, April 28, 2006
Getting to the bottom line
Appraisers help figure out just what your house is worth
by Elizabeth Perry
Hearing a snarling black German shepherd, Terry Kent turned around and saw drool spilling from the barking dog's mouth. He ran for the back gate of the house and quickly shut the gate behind him.
Checking himself to make sure he had come out clean, he noticed the dog had managed to snap off the bottom of his pant leg.
"I had to get a new pair of slacks that day," said Kent, a certified general appraiser and real estate agent in Menlo Park.
Mail carriers and pizza delivery drivers aren't the only ones who can expect to get attacked by a dog during their job. Real estate appraisers also need to be alert and aware of their surroundings.
Sometimes neighbors suspect an appraiser could be a burglar prowling around a nearby property, especially if it is vacant. Some take no chances when they see an unfamiliar face in their neighborhood, and immediately call the police.
"It was about 6 p.m. and getting dark when I was taking some measurements in the back of a house when a policeman came out holding out his gun telling me to turn around," Kent said.
Other times appraisers will sit in their car for a while next to the home they appraised and write out or type up notes about the property.
"About four out of 10 times, someone will come up to your car and ask you what you are doing," Kent said.
While some may encounter an over-zealous watch dog or nervous neighbors, most are just concerned with getting the job done -- figuring out just what a house is worth, so a lender can decide whether or not it is loan-worthy.
Certified licensed appraisers, who need 180 hours of education and 3,000 hours of experience, are sent out by banks, savings and loan institutions and credit unions to figure out an accurate value for properties. Not only are they on the job when a house is on the market, but also when a homeowner wants to refinance -- even if they purchased the house just a couple of years earlier.
In a volatile real-estate market, the real danger is mis-valuing a property.
Most appraisals come pretty close to the price a real estate agent will set, according to Jo Jackson, a real estate agent for Coldwell Banker in Palo Alto.
Jackson said an agent will have already done a market analysis for the property that is for sale and that the asking price and the appraised value shouldn't be too different.
"It is extremely rare that a home is sold 40 percent less than what it is appraised for," she said. "The appraised value can be $1 million and the house sells for $900,000. That is the most it will differ."
Licensed appraisers make note of all of the aspects of a property to place an appropriate value on the property.
"The normal procedure for when you are doing an appraisal is that you will measure the building, note the finishes of the interior, quality, floor plan, how it flows and the sizes of the rooms," said Kurt Reitman who appraises properties for The Reitman Group in Palo Alto and nearby cities.
The overall condition of the house plays a large role in determining the value of the property. It is also important to note when the property was built because older homes can sometimes have quirks or problems.
"You look at whether it has a one-, two- or three-car garage. You look at the heating systems and electrical power to see if it is a 100-amp, 200-amp or if it is a 60-amp. Older homes have less amp," Reitman said.
Appraisals range in cost depending on what type of property is being appraised and how complex the appraisal report needs to be.
"The average rate for a single-family home appraisal is $350 to $450 and can take anywhere from five to 10 hours to complete," Kent said.
Even though property appraisers risk being attacked by dogs, there are certain advantages to working in the appraising field, Kent said, such as working part-time or flexible hours.
"You can control your own schedule," Kent said.
And, technological advances have made the job easier in recent years.
"There are handheld computers where I can draw a floor plan and other laser devices for measuring the interior of walls," Kent said.
Kent said being an appraiser has been a good career choice for him because he is in the real estate industry and having an appraising background helps his judgment on certain properties.
"It's a good base to have, whether you're in real estate, lending or brokerage," he said.