Just Off the Phone: A New Realtor's Top Questions About Appraisals Answered

I just hung up the phone with a newly licensed real estate agent based here in Riverside County. They were preparing for their first listing in Murrieta and wanted to make sure they did everything right when the appraiser came out. They asked some of the most common, yet critical, questions that every new agent—and even some experienced ones—should know the answers to.

Here is a summary of our conversation and the answers to the questions we covered. Whether you are representing buyers or listing properties, understanding these appraisal mechanics will save you and your clients valuable time during the transaction.

1. What is the difference between a Comparable Sale (Comp) and an Active Listing?

This is a common point of confusion. The agent mentioned they were looking at active properties down the street to justify their listing price. While active listings are valuable for understanding your competition, they are only half the equation for an appraiser.

• Comparable Sales (Closed): These represent historical, proven market transactions. They are the actual dollar figures buyers were willing to pay and banks were willing to finance. Appraisers rely on closed sales (typically within the last 6 months) to establish the baseline market value.
• Active and Pending Listings: These show the current direction of the market (rising, stable, or declining) and current inventory levels. They can support an appraisal but cannot stand alone as the primary evidence of value since the final sale price is not yet finalized.

2. How do appraisers handle unpermitted additions or patio conversions?

The Murrieta property had a beautifully finished garage conversion that the seller was using as a family room. The agent asked if they could advertise it in the MLS as livable square footage.

The short answer is: Only if it meets building guidelines and has been fully permitted. Here is how appraisers evaluate this:

• Gross Living Area (GLA): To be included in the official GLA on the appraisal report, the space must be finished to the same quality as the rest of the home, be heated/cooled, and have proper permits. Unpermitted conversions are excluded from the main GLA.
• Value Contribution: Even if excluded from GLA, if the conversion was done in a workmanlike manner and has utility in the local market, the appraiser may grant a separate line-item adjustment for the space. However, it will not carry the same weight as permitted, above-grade square footage.

3. What is an 'Appraiser Package' and how should I prepare it?

The agent asked if it was considered 'inappropriate' or 'collusion' to talk to the appraiser or give them information. Absolutely not! Appraisers welcome objective, factual data about the property.

I advised them to put together an Appraiser Package and hand it to the appraiser during the walk-through. It should include:

• The Purchase Contract: Include all counter-offers and addendums.
• Upgrade List: A detailed, chronological list of all capital improvements (e.g., roof replacement in 2024, kitchen remodel in 2025) with approximate costs and contractor invoices if available.
• Your Comps: The list of comparable sales you used to help establish the list price, with short notes on why they are comparable.
• Offer History: If the property received multiple offers, a summary of the bid count and terms helps the appraiser gauge market demand.

4. Does a finished basement or converted attic count in the main square footage?

Finally, we discussed how square footage is measured. Under national **ANSI Z765 standards** (which Fannie Mae and Freddie Mac require appraisers to follow), square footage must be above-grade.

Any space that is even partially below the ground level—like a walk-out basement common in some hilly parts of Temecula and La Cresta—must be calculated and reported separately from the main above-grade GLA. Attics must have a ceiling height of at least 7 feet over at least 50% of the finished area to be counted in the GLA.

Partner with local appraisal experts

Building a good relationship with local appraisers is one of the best ways to grow your real estate business. At Mateo Appraisal Services, LLC, we are always happy to answer questions for local agents. We provide certified, defensible appraisals for pre-listings, estates, divorces, and more across Temecula, Murrieta, Winchester, and French Valley.

Visit our Contact Page or call/text us at (951) 764-3212 to connect with us today.