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Wondering, why is my landlord having my house appraised? Well, to get an answer to that question, you’ll have to think from the perspective of your landlord.
Suppose the interest rates are low, and the homeowner or your landlord wants to look into refinancing their rental property to save money on the home loan. An appraisal of the property becomes an important part of the refinancing process.
Why is my landlord having my house appraised?
The primary reason for a landlord to get an appraisal on a rental property is to facilitate refinancing that will get them a better interest rate on the loan. A second reason could be that the landlord is working to get a loan for another investment and using their rental property as collateral to secure that loan.
In both case scenarios, a house appraisal becomes an important part of the loan process.
It assures the loan lenders that the value of the house in question is in line with the loan amount they are loaning. A rental property appraisal could also help the landlord assess their return on investment before seeking a loan.
Things to know before a rental appraisal
A rental property appraisal is a standard procedure of a refinancing process. If the house doesn’t appraise for the estimated value, the lender won’t be able to complete the refinance process.
It’s understandable for your landlord to worry about the rental property appraisal, especially if a tenant is living on the property. They may not be able to do significant remodeling or landscaping in the presence of a tenant. The onus lies on the tenant to improve the rental property’s appraisal and cooperate with the appraiser when they come and visit the property.
Who completes the rental appraisal?
A professional property manager visits the property for a rental evaluation. They provide the landlord with a complete report on the earning potential of the investment property based on current market trends and rent levels for similar properties in the area.
What does a property appraiser look for?
An appraiser evaluates the structure and the property as a whole. The first thing they’ll look at is the house’s foundation, the roofing system, home systems, and the quality of the building materials used.
The appraiser will also be verifying the square footage – from the lot size to the house’s exterior – and checking if the measurements are accurate. Keep in mind that areas such as basements and garages may not include in the gross living area but are an important part of the overall home value appraisal.
The appraiser pays close attention to any roof leaks, cracks in the foundation floor, water damage, holes, or other issues with the exterior. Most importantly, they will see how the property complies with building codes. If there are any concerns on the structural integrity of the property or serious deterioration, they’ll take cognizance of the issues.
What happens when an appraiser visits your house?
An appraiser determines the current market worth of a property by conducting a room-by-room inspection to assess the condition of a property. For an assessment of the outside condition of the real estate, they would walk the length of the property and make notes.
An appraiser will typically spend 30 to 45 minutes on the property – measuring the house’s dimensions, inspecting its amenities, and evaluating its general condition, both inside and out. They will also take photos of the outside, garage, and interior rooms.
How much does a rental appraisal cost?
A rental property appraisal can cost $400-$2,400 or more, depending on the location and number of units, and normally includes a rent survey and the property’s income statement.
Read more: Home appraisal cost and factors affecting it
Your landlord must communicate with you, the tenant, about the house appraisal and how important it is to get a good appraisal. Also, give a mandatory standard landlord notice before allowing the entering of an appraiser on occupied property. The tenant must help in creating a good first impression on the appraiser by keeping the rental unit clean and clutter-free before the appraisal.
The landlord can provide the tenant with an incentive to boost the appearance of the property. If there are any serious issues, address them before an appraisal. For example, fixing the hinges of a cabinet door, gluing down the curling corner of a vinyl floor, repairing the air conditioning if faulty, or replacing a damaged window.
However, do keep in mind that a good appraiser will look past any cosmetic issues or home decor and focus more on the structure and the property.
If the tenant has kept the property in good shape, the appraisal will hopefully help the landlord get the refinancing or the loan they need.
Why is my landlord having my house appraised? Well, now you know. Whether you’re someone who owns an investment property or a tenant in the rental market, there are a few things that you should know about residential rental properties. There could be times when your landlord will want to have their property appraised – regardless of whether it’s occupied or unoccupied.
As mentioned earlier, the reasons for an appraisal of the property are to refinance in order to get better interest rates or for a home equity loan or home equity line of credit (aka HELOC) where that property is being used as collateral on that loan. It’s in your best interest as a tenant to make sure the house appraisal goes smoothly and quickly.