There are other things to review in the report besides the appraised value. Most loan officers and mortgage brokers start out looking at one thing when they receive a property appraisal report – the appraised value. While important, there are other important things to look for when reviewing the report too. 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?
Although this may seem like common sense, there are certain features in (or characteristics of) a home that may make them unattractive to some lenders. For example, 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 before the end of their current term with the same lender it is wise to check the old appraisal report for things like knob-and-tube wiring, asbestos wrapped pipes, well-water, and proximity to gas stations (among other things) because the lender may have changed their property risk rules since the last mortgage was arranged. Don’t waste your clients’ time with that lender, and/or incur the appraisal expense.
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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.