An appraisal is a core part of getting a deal closed. Typically ordered by the bank, an appraiser will conservatively assess the value of the property based on a couple of factors, such as income, comps, and physical upkeep. The loan amount (LTV) is then determined based on the appraised value. On the basis thereof, it’s important to know the following before having your property appraised:
Do not overshare
The number one rule that every owner should know before having a property assessed is not to overshare. Appraisals operate on a “dont ask; dont tell” policy, from basic self-understood practices, such as not pointing out repairs or discussing negative aspects of the property, to making sure to be on good terms with your tenants so they don't deliberately sabotage the appraisal. If such a case were to arise, you must be certain to have a good broker, which brings us to number two.
Have good relationships
Although appraisers are usually commissioned by the bank, a good relationship with the appraiser (and the bank) can tip the scale in favor of the owner. Appraisals are subjective, as the property is assessed based on the appraisers knowledge and understanding of the market, as well as the comps and numbers he uses. For example, a property can be valued by the owner at a greater amount because he comprehends the the culture of the area, and would be convey the significance it brings to the value of the property with the trust of the appraiser, resulting in approval from the bank for a greater loan.
The site visit is 10% of the appraisal
Aside from appraising the physical upkeep of the property, the appraiser examines the documentation sent by the underwriter to determine the value. The more clear-cut the documentation, the more the appraiser will trust the owner. As pointed out in rule number one, oversharing can be detrimental. An appraiser can ask for documentation he doesn't need in order to ascertain the appraisal is correct, but if they do not ask, it should not be sent. Also, being as the appraisal is a core part of closing a deal, it’s important to cater to the appraiser, sending in the updated rent roll, income, and all other documents in a timely and orderly fashion.
All three rules boil down to one fact: surrounding yourself with the right professionals can significantly up your property value. By maintaining good relationships and showing the appraiser the intrinsic value of the property, as well as by drawing up the proper, quality documentation, that can make all the difference.