Just as a Realtor plays a pivotal role in a real estate transaction, the appraisal serves as a

cornerstone in the mortgage loan process. However, there are times when agents and

appraisers may have differing views on a property's value as well as other factors related to the overall condition of the property.

We recently consulted with two local appraisers, Kyle White of Kyle White Appraisals and Chad

Loflin of Loflin Appraisal Services, to gather valuable insights on some of the most common

misconceptions that arise during real estate transactions. We are sincerely grateful for the time

and attention to detail that these two gentlemen dedicated to this article.

Chad-I would say that while we never want an appraisal to come in short of a given contract

price, our job is not to be a facilitator of deals but rather to provide completely objective and

impartial valuations of properties. In the long run, this serves to ensure healthier lending and

real estate industry standards.

Kyle - Like Realtors and mortgage loan officers, we also hold a professional license. Our

appraisals are subject to evaluation, and consistently poor performance can result in sanctions

or disciplinary actions. Also, we cannot overlook comps in the same neighborhood.

Chad-The primary difference lies in the level of scrutiny and the required repairs. FHA

appraisals involve a more thorough inspection and impose stricter standards to meet HUD

guidelines. For example, utilities must be on and working and appraisers are required to

conduct a head-and-shoulders inspection of attics and crawl spaces. Homes built before 1978

must have any peeling or flaking paint repaired, and any health and safety concerns must be

addressed before a property can qualify for FHA financing.

Kyle-Health and safety issues can include a range of problems, such as exposed electrical

wires, active roof leaks, broken windows, and missing or damaged handrails on stairs and

decks. Plus, the peeling paint issue applies to ALL structures on the property, not just the

house.

Chad-This is a common misconception. While we as appraisers must identify and document any deferred maintenance during inspections, not all of these items necessarily require repair.

However, a conventional appraisal should still mandate the repair of any significant issues that

could affect the health and safety of the occupants. For instance, repairs would be required for

serious concerns like a deteriorated roof, a damaged deck, or visible structural issues due to the risks they pose.

Kyle- Since it functions differently from the main level and is generally less expensive to build, it

is classified as a basement. When Realtors conduct Comparative Market Analyses (CMAs),

they should compare split-level or split-foyer homes to similar properties. Occasionally, I compare this type of home to a ranch-style house with a basement to provide a more accurate

valuation.

Chad-An appraiser must evaluate and assign value to different types of spaces separately. The

upper level should be included in the home's Gross Living Area (GLA), while any below-grade

or partially below-grade areas should be classified as basement space. This distinction is based on historical data, which indicates that the market typically assigns a higher value per square foot to above-grade space compared to below-grade or basement space.

Kyle- The impact on appraised value can vary with inventory levels, but having the primary

bedroom on the main level typically boosts the property's value.

Chad-Knowing the specifics and timing of replacement for components like roofing, HVAC,

electrical systems, and insulation is helpful. Documenting these updates can lead to positive

adjustments in a property's appraisal, which in turn can have an impact on its overall value.