HD Living

by Julie Jacobson

We often lament that hardwood floors, pretty bathrooms and fancy countertops provide quantifiable returns on investment, but future-proofing technologies such as structured wiring do not.

And now comes the green movement and appraisers aren’t buying that either.

During the recent NAHB National Green Building Conference, sponsored by the National Association of Home Builders, builders seemed especially frustrated by the inability to get their green technologies recognized by lenders and appraisers.

Anecdotal evidence collected by the NAHB indicates that builders have been able to sell sustainable homes “considerably faster than the traditionally built new homes …”

But that fact doesn’t seem to sway the mortgage community.

According to an NAHB report on the conference, “The widespread problem of low appraisals—driven largely by a glut of foreclosed properties and a slow market—has been doubly frustrating for green builders because the vast majority of appraisers are unable to recognize the value that green features add to the home.”

Apparently, the prospect of sharp reductions in monthly utility bills doesn’t faze appraisers, who often care more about the size of a bathroom than the modernity of the whole house.

Guess what? If you don’t think an appraiser gets it, you can request another one, according to Rick Porter of PowerWorks, a sustainability consultant.

“Green homes face a red light,” he said at the conference. “Appraisers don’t understand costs and buyers can’t get the full financing they need.”

Porter cited Fannie Mae guidelines advising lenders not to assume that an appraiser is competent.

He said, “You have every right to say I want a competent appraiser. You do not need to roll over on this. If they have not seen or appraised a green home, ask for an appraiser who has appraised one of these homes or has knowledge in energy efficiency.”

Builders and consumers apparently don’t understand they can speak to the appraisers, “but as long as they are not unduly trying to influence the valuation, they can voice their concerns.”

Appealing an Appraisal
Excerpt from Los Angeles Times,

First, make sure your appraisal is performed by a real person who actually gets out of the car and studies the place. If your lender is relying on an automated valuation model (AVM) or a drive-by, ask to have your house valued by an ambulatory human.

If a real, live appraiser comes up short, “Suggest, firmly but nicely, that the appraiser assigned by the lender erred and request that she be asked to take a second look,” says the LA Times.

If the lender won’t budge, you can foot the bill for your own second opinion, but it better come in at least 5 percent above the original appraisal or no one will care. In the end, though, lenders can rely on the appraisal of their choice.

Try harder and do your own legwork, searching out “comparables” that your appraiser may have missed—like homes that that were never listed in the almighty Multiple Listing Service. In some major markets, as many as half of all transactions occur outside the MLS, says the LA Times.

Double-check the comparable sales cited by the appraiser. Generally, the comps are based solely on the MLS description and those narratives can be woefully inaccurate. If possible, get permission to snoop through your neighbors’ homes with pencil and notepad in hand.