Most loan officers and mortgage brokers primarily focus on one component when they receive a property appraisal report – the appraised value. While important, there are other crucial components to consider.
Here's two:
Yes, that’s right! Neighbourhood fit is very important to a lender. They tend to be happiest lending on properties that are closer to the average of the neighbourhood than properties that are the cheapest or most expensive. Lenders are doing street views of properties to get a feel for the neighbourhood. In conjunction with the appraisal report, they’ll know if this house is the only one on the street like it (like a brand-new infill property surrounded by wartime homes) or is similar and likely to sell quickly in the event of a mortgage default.
Also remember, since Google Streetview is so readily available, lenders will know if the house is near undesirable neighbours. So if you have a property near a gas station or dry cleaner be certain to put that in your application notes as opposed to trying to hide the fact. Why get further down the line only to have your deal cancelled?
This may initially seem like common sense, but there are certain characteristics of a home that some lenders find unattractive. For instance, some lenders will not lend on a home with knob-and-tube wiring, even though it has been tested and approved by the appropriate electrical safety authority.
When considering a refinance for a customer with their current lender, we suggest checking old appraisal reports for details such as knob-and-tube wiring, asbestos wrapped pipes, well-water, and proximity to gas stations. The lender may have changed their property risk rules since the last mortgage was arranged. Don’t waste your clients’ time or money with that lender.
There are other things to review in the report besides the appraised value. You can get ten tips in less than 8-minutes with our Read Reports Like a Pro video. The tips are presented in rapid fire sequence, and the information you’ll take away from the video will save you hours of lost time and money in the future.
Thanks for reading. Contact us if you need an appraisal report or additional information at www.valueconnect.ca or toll-free: 844-383-2473 ;4255.