The Realtor’s Guide to Appraisals Part 12: FAQs

Over the years, we’ve collected some of the most frequently asked questions from Realtors, and here they are for you – with answers!  If you have any additional questions, feel free to reach out to Ryan personally at ryanbays@riverfrontappraisals.com

• Who Needs to Be at Home During an Appraisal?

The next time you schedule an appraisal for one of your listings, you may get asked by your seller, “do we need to leave during the appraisal?”  For some reason, a lot of homeowners think they have to leave.  Perhaps they just heard somewhere that it’s best if no one is home.  Or maybe that’s what their Realtor thinks, based on what they heard an appraiser say.  Ultimately, this is a decision the homeowner needs to make, with your assistance.  To help you, I’m going to list a couple of pros & cons of having the homeowner stay or leave.

If the homeowner is at home for the appraisal, they can answer any questions an appraiser may have.  When a homeowner is present during our appraisals, I get to confirm lot size, purchase price, and many other elements related to the sale of their home.  I can also ask questions about recent improvements, upgrades, renovations or additions.

If no one is at home during the appraisal inspection, it can definitely be a quicker process, if the appraiser isn’t interrupted by the homeowner or kids running around.  However, the appraiser won’t be able to ask any of those questions I just mentioned, so that will have to come at another time.

My advice is to have a homeowner there, at the property.  Not only can they answer the appraiser’s questions, they can keep dogs at bay, and ensure the appraiser has everything they need to complete the appraisal without any further delays.  Other appraisers prefer no one to be at the home so they can get in and out in a hurry and not have to be delayed by the homeowner.  So again, this comes down to a decision made by the homeowner with your help, but the benefits of having your seller present during the appraisal far outweighs having them gone.

• What is the Tidewater process for VA appraisals?

I really enjoy doing VA appraisals.  Although they take a bit longer to process than a typical loan, the appraisal process is smooth and generally without much trouble for either the appraiser or the borrower.  And, they have this great process called Tidewater.  Even the name is cool.  Tidewater.  Sounds like some covert government op, doesn’t it.  Well, it is a government program, but definitely not covert!  It’s actually a great service the VA provides for their borrowers in the event an appraiser thinks a home isn’t going to appraise for what the veteran needs. 

Here’s all you need to know about the Tidewater process.

Tidewater is a process that allows appraisers to ask for additional sale information prior to the appraisal being completed.  Although most data sources are online, and access to data has improved 100-fold over the years, there may be times when an appraiser has a hard time finding sales, or maybe even just missed a relevant sale.  Using the Tidewater process allows interested parties the opportunity to provide additional sales information that may help support the contract price. 

How does Tidewater work? 

Let’s say I complete my on-site visit at a home which is under contract.  I then come back to my office and a day later, I begin work on the analysis portion of the appraisal.  I start writing the report, and putting sales into the appraisal, making all necessary adjustments.  And it’s not looking good.  The home is under contract for $279,000 but the comps so far are telling a slightly different story.  Maybe it’s more around $265,000.  Hard to tell at this point, but I think I need to stop and invoke Tidewater.  

At this point, I open the order I received from the VA.  This has the address of the property, the borrower, sale price, and also the Point of Contact (POC) information.  The POC can be anyone including a Realtor, loan officer/originator, etc.  If there is no POC provided, I simply contact the appraisal requestor shown on the VA portal.  I then notify the VA that Tidewater has been initiated, and I wait.

Now although I’m asking for more information, I’m not at liberty to discuss the content of my appraisal, or any results (real or assumed) with the POC, beyond explaining that I’m asking for more information that the POC hopefully can provide in support of the transaction.

Now it’s time for that POC to get to work!  If you, the Realtor, are listed as the POC, you have just two working days to provide additional information to me.  Although the VA suggests providing it in a formation similar to the comparable sale ‘grid’ on the appraisal report, you can provide it anyway you like.  You can also provide pending sales to support time adjustments, but you’d need to provide the appraiser with a contract and addenda.

The last step in the Tidewater process is for the appraiser to complete the appraisal, indicating that this process was utilized.  There will be an additional addendum to the appraisal, including what information was provided, and the increase in value (if any).

Just as in any reconsideration of value (ROV) request, Tidewater doesn’t always work, but unlike a typical ROV, Tidewater is mandatory if the appraiser determines that the home might not appraise for the contract price.  And, it must be done before the appraisal report is finished.  These are benefits to our veterans, and I couldn’t be more proud to be a VA-approved appraiser for these reasons alone.

So the next time you have a VA sale, be on the lookout for this process.  And, if for some reason the appraisal comes in below contract price and the Tidewater process was not initiated, you need to contact the lender as soon as possible.

• What’s the Difference between a Modular and Manufactured Home?

Do you ever see the terms Modular, Manufactured, Mobile, and Prefab used interchangeably?  You likely have, as there’s so much confusion around these terms.  So let’s look at definitions of both Manufactured and Modular to help you be able to understand the difference.

What is a manufactured home?

You know you have a manufactured home if you have the following:

1. Manufactured homes are built on steel beams as opposed to wooden floor trusses. You should be able to access your crawl space and see your truss system under the home.
2. Manufactured homes are built to HUD code, and must have a HUD Certification Label (HUD Tag) attached to the exterior of each section.  This is a metal tag on the end of the home (unless it’s been removed) and it’s put on the siding with little pop rivets, and has the section’s HUD number listed on the tag.
3. Just as you should have a HUD Certification Label (or set of labels), you should also have a HUD Data Plate/Compliance Certificate, usually found attached to the inside of a kitchen cabinet or the master bedroom closet wall (though it could be found anywhere).
   This is an 8.5×11” paper with a bunch of numbers, and a couple diagrams of the United States.  It has very important information about the manufacturer, date of manufacture, wind & roof loads, and also has the HUD and serial numbers listed.

What is a modular home?

Unlike a manufactured home, a modular home is not built to HUD code.  By exterior appearances (and sometimes even interior), a modular home can often be hard to distinguish from a manufactured home.  Because unlike manufactured homes, Modular homes are entirely customizable.  Therefore, any home you see while driving down the street could be a modular home.

A modular home is pre-built in sections at a factory or other controlled environment.  It is then assembled on-site and must conform to all local and state building codes.  Unlike a manufactured home, a modular home is not built on a non-removable steel chassis.

Why is it important to know the difference?

When appraising a manufactured home, there are certain guidelines appraisers must follow.  We even have a form made specifically for appraising a manufactured home.  Most lenders will want to see a minimum of two closed sales of manufactured homes.  If sales are extremely limited, an appraiser might be able to use a sale of a modular home or other home, if needed.

Modular homes are somewhat similar in that a lender will want to see as many sales of modular homes as possible, but the options are greater for alternate sales.  I can use a site-built home, high quality manufactured home, or other if I don’t have modular home sales.  I just need to be careful to be aware of, and account for, any differences in quality of construction, design, and marketability.

All of this means that it is highly important that the home is classified correctly.  Either by the taxing authority, Realtor, or seller.  Because when an appraiser searches for sales, he or she needs to be able to find the best, most comparable sales!

• How Long is an Appraisal Good For?

While some users of appraisal services have guidelines for how long an appraisal is valid, there really isn’t an across-the-board answer to this question.  

To answer this question in a way that serves you best though, let’s get to the heart of the question.  When this question is asked, what most Realtors are wondering is, “My sellers have an appraisal completed two months ago.  Is that value still good?  Can I use it in my pricing strategy?”  

If I’m pressed to answer this question, I usually answer it like this:  “The report is good for just one day”.  Since the appraisal report has an effective date, what I’m saying is that as of this date, the value is X.  Grab an appraisal report the next time you can, and look at the effective date of the appraisal.  For a typical purchase transaction, the effective date is usually the date of inspection, or when the appraiser viewed the property.  This is not to be confused with the report date, which is typically the date the report is sent to the client.  So let’s say I viewed the property on May 10, and the effective date therefore, is May 10.  The value estimate was $395,000 as of that date.  Who knows what will happen on May 11?  What if the city’s largest employer shuts its doors?  What if interest rates plummet or climb more than expected?  Anything can happen that could affect the value, so literally, that value is only good for the effective date. 

Now, that doesn’t mean that the home is worth more or less one day later.  Just keep an eye on the market, and if you’re fairly stable, the appraisal report should be good for a short amount of time.  If you’re in a depreciating or appreciating market, then the appraisal report won’t be valid for as long.

• What Makes a Room a Bedroom?

There are just a couple of main things any room must have in order to be considered a bedroom.  Remember that these rules are for bedrooms on any level of the home, including the basement.  And here they are:

1. Exits.  A bedroom must have two forms of exit.  The fancy word you’ll see some time is egress which simply means exit.  While the means of exit could be two doors (maybe one interior and one exterior door), we most commonly see one door and one window.  That means that a room with only one door and no windows cannot be considered a bedroom.
2. The second thing any room must have to be considered a bedroom is a minimum area & size.  Per the International Residential Code (IRC), habitable rooms must have a floor area (square footage) of no less than 70 square feet.  These rooms also must not be less than 7 feet in any horizontal direction.  A 7×10 room will be just fine.  A 5×13 room, however, will not.

What isn’t required for a room to be a bedroom?

A closet!

Say what?!  That’s right.  A closet is not required.  There is no written standard that requires bedrooms to have closets.  Keep in mind, however, that your state or local code may in fact have such a requirement.  But most importantly (especially from an appraiser’s perspective) is the market.  What is expected in your market by buyers?  And, even in some markets, that expectation may change, depending on the style or age of the house.  Some older homes don’t have closets at all – or have very few.  I’ve done plenty of appraisals on older homes that if having a closet was a prerequisite for a bedroom, then the house wouldn’t have any bedrooms at all!

Committed to helping you understand your home’s market value,

Ryan Bays, SRA, AI-RRS