Let me share you a story of about the importance of the home appraiser when it comes to refinancing your mortgage or qualifying for a new mortgage. My previous mortgage refinance took 65 days, and I wanted to share what I learned.
Back before the financial crisis, a refinance would take at most 40 days to complete. Nowadays, banks are asking for every single document out there, making sure the borrower is legitimate. Credit standards are tight.
At least I can sleep well knowing that due to the new standards of due diligence, there will be a lower chance of another housing crisis in the future. The same concept goes with airport security come to think of it. Getting strip searched is a pain in the butt, but one should take comfort in a safer flight.
After more than 10 years of appreciation in the stock market and real estate market since 2009, it's good to be more cautious. The last thing we want is another meltdown that ruins our financial independence plans.
Dealing With The Home Appraiser Twice
My lender required two independent home appraisers for my refinance. I don't care so much because the bank is eating the cost, which is an extra $750 for 30 minutes of appraisal work. What a joke.
The first home appraiser was a man who I left alone to do his thing. He took the home square footage measurements with his laser tape, asked some basic questions on home improvements, and took some notes. A week later, I got the report in the mail and was pretty stoic.The appraised value was right at the middle end of the range.
A week went by, and I started to feel a slight sense of panic because I kept hearing about people getting their refinances denied due to high loan-to-value ratios. Further, the average credit score for approved mortgages is now very high.
I started to worry that after 40 days, I might very well get rejected from my 3.625% mortgage refinance rate due to some appraiser who might be in a bad mood that day.
The Game Plan To Smooth Talk My Home Appraiser
I wasn't about to risk letting the second home appraiser sink my chances at saving tens of thousands of dollars over the duration of the loan. When Jen called to schedule an appoint, I asked her where she'd be coming from. East Bay she said. Ah hah! Clue #1.
Then I asked her what time is most convenient for her. She mentioned Saturday morning. No problemo, even though I had to reschedule some meetings that morning. I hung up the phone and anxiously waited for the next Saturday for her to arrive.
When Jen rang the doorbell, I greeted her with a smile and asked how her drive over was. She said fine, and how much nicer the weather is in San Francisco because it's over 95 degrees in the East Bay.
Welcoming The Home Appraiser Like An Honored Guest
I asked her if she wanted something to drink and shared with her some of my favorite butter cookies. After she downed a couple, I began introducing the house. I made it a point to let her do her work and not over crowd her. In addition, I mentioned all the home improvements we've made over the years that really boosted the value of the house in our eyes.
When her 30 minutes were over, I thanked her for her time and we started sharing stories about the housing market and reminiscing on the good old days. Perfect, we were bonding.
I asked her all sorts of questions that made her feel like an authority.
Questions such as: What are some of things you'd recommend homeowners do in order to improve the value of their homes? Can you share with me the recent refinancing trends and what is the biggest obstacle people face is? What are your thoughts on the housing outlook?
My goal was to learn something from her, but also to really make her feel special too. So many times we just speak and don't listen. I hung to her every word and maintained eye contact while nodding with enthusiasm.
The Home Appraisal Report Came Out Great
A week later, I got the second appraisal in the mail. Success! The house appraised for $75,000 more than the first appraisal. Sweet!
Of course, none of these values means squat since the value of one's asset is only what someone is willing to pay for it. That said, what this second higher appraisal means is that there was no doubt about my refinance being able to close.
I took the time to accommodate Jen with her busy schedule and made her feel special by starting a conversation and providing her food. I didn't want to risk a poor second refinance to ruin my chances of saving a bunch of money so I made damn sure to please the appraiser.
Looking at the second appraisal in detail, there is virtually no difference between the comparable houses she used, and the cost to build. The only difference comes from the subjective value of the house where she added ten thousand dollars here, and twenty thousand dollars here and there.
In conclusion, it's worth making nice with someone who holds the key to your refinance future. In fact, it's worth making nice to anybody who can help or prevent you from succeeding!
The home appraiser is key to getting a mortgage to buy a property or refinancing a mortgage. Treat the home appraiser well!
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Great article. Here is something else to keep in mind I’ve had four appraisals done in one year and every time I got a man the appraiser was always under the value but every time I received a woman she was right on the money. Women are just nicer when it comes to appraisals.
You should really do this by reflex by now :). As Forest says, by habit.
Wow! That is impressive. It just shows how far a little bit of a good attitude and treating people well goes. Imagine how far our relationships would go if we made a habit of treating people this way. Not just in business, but also in our personal lives.
Great Post.
Sam, Very nice story with a happy ending. I liked how you went through the specifics of the entire process-instructive as well. Congrats on the low rate!!! I make a concerted effort to treat others with consideration whenever possible. There’s never a down side, and frequently a personal benefit!
Great principles to live by! I’m listening to Dale Carnegie’s “How to Win Friends and Influence People” audiobook when I drive to and from work!
Your actions are exactly what Dale describes! It’s good to hear that such techniques still work! Warren Buffett read the book, and signed up for classes (I believe).
Butter cookies!!! My favorite!
Sam, as you know I recently went through the same process….and refinancing took forever!
I tried the same approach with my appraiser, and we really hit it off. He was a family man, and chatted up my wife and I and I thought we made a new friend.
And of course appraisals can be quite subjective…especially in my neightborhood where there’s only been a couple transactions in a year or so, but unfortunately after values dropped a bit.
At any rate, our sweet talking did NOT pay off and he choose to line us up with one lower comp (not even the same type of house), instead of the dozens of comps from a year ago (like when I bought my house). As a result, I had to come up with some major coin at closing to get back up to 20% down for my refi. I’m glad to hear that the smoozing worked for you though….guess it’s the luck fo the draw.
Oh man, that sucks to hear! What’s up with that?!?! Well, at least you tried. I wonder if some people try bribing the home appraiser… hmmmmm.. now THAT would be an interesting investigative report! I can see it happening.
Despite you coming up with cash to make it 80% LTV, you stil win b/c it’s your cash deployed divided by your interest savings = a return probably much much greater than even the best long term CD rate!
Wow! Thanks for the insight. I have a friend that is just starting the refinancing process, I’ll be sure to pass this blog post on to her.
Great, I am reading this three days after my appraisal was completed!!!!! Hopefully, I was nice ENUF!
If you told him or her that he is handsome or beautiful, engaged their intelligence, and fed them your best baked cookies with milk, you’re good no worries!!!
Let us know how it went when you know!
I try this technique with every phone Customer Service Rep, it is amazing how much power they really have over your account. While I can’t offer them cookies, blaming The Wife or the company and not them…really does help
Does the blame the wife tactic work? If so, neat! May have to try that someday.
Congratulation on getting the refi done! Hope you are saving a bundle.
We refi almost 2 years ago and it was a pain, but we didn’t have to get 2 appraisals. It’s always good to treat people nicely. :)
Cool. You should consider refinancing again if you can. I’ve lowered it 1% since 2 years ago. Worth asking at least and seeing how much you can save. I can’t believe how much I’m saving. I coulda swore 2 years ago was the low, but here we go lower! Hallelujah!
Great tips sam. It’s amazing what making people feel at home can do for a deal of any type. I enjoy 101 centavo’s way of putting this up at the top.
I’m actually going to be looking for a house starting in late Jan and will def use these techniques =)
It is amazing how poorly some people treat others. When we were having some remodeling done, I offered some of the workers cookies/beverages everyday. On the first day, they were shocked. They said most times, homeowners wouldn’t even talk to them, let alone try to feed them. That broke my heart. On the last day, we had a big pizza party, and had a good time.
I try to always be grateful when someone provides a service. The world is rough, so why try to make someone’s day worse than it has to be?
If I was having an appraisal done, I probably would have offered a foot massage to… :)
I think its because they get a bit self-righteous about costs. Growing up my mother taught me that the barely minimum polite thing to do with contractors was to feed them. Meanwhile I’ve heard neighbors complaining about how much they’re paying workers and the fact that those workers take a lunch break right in front of them. Needless to say they always have inexplicable cost over runs.
Foot massage? Haha, nice! Seriously, it’s so important to treat people nicely and with respect, especially if they are doing something that may help you, even if it is still their job!
Feeding and hydrating home contractors is a no brainer! Make them want to do a good job for you!
A good moral: it’s cheap to be nice and expensive to be a jerk. I try to have the same principle at work, be nice to the worker bees. It doesn’t take much effort, and reaps great rewards.
I like that phrase. It’s cheap to be nice, but sometimes it’s hard to be nice if the other person really tests your patience or isn’t a nice person to begin with. Generally though, people are at least normal, so treat them well!
I like that phrase too.
It’s easy to forget to treat others like we want to be treated when we’re stressed or busy, but taking the time out to engage in humanity is so important.
Great idea to feed the contractors and renovation staff, I’ll do that when they get started :)
How much remodeling do you plan to do in your mansion?? Take it easy and bake for longer and more expensive, to set expectations!