Appraisals are often one of the most nerve-wracking steps in the real estate process — and it’s easy to understand why. According to Realtor magazine, 20% of home sales are delayed due to the appraisal. Unfortunately, this can often lead to the entire deal falling through, leaving both the buyer and the seller in the lurch. If the thought of an appraisal has your heart racing, don’t worry. You can do some things in preparation for an appraisal to appraise your home that can help your home achieve the highest appraised value possible.
Keep reading to find out five must-know appraisal tips.
What Is a Home Appraisal?
A home appraisal is an unbiased expert opinion of the value of a home. Appraisals can greatly impact the final sales price of a home, so it’s important that they’re accurate.
To appraise your home, you are conducted by a qualified appraiser who is typically hired by the buyer’s lender. Usually, an appraisal happens after the buyer has released the inspection contingency.
As part of the appraisal process, the appraiser will walk through the home, inspecting its overall condition. They also make a note of the square footage, the number of bedrooms and bathrooms, and the surrounding area.
To help them determine the value, the appraiser also uses comparable listings, commonly known as “comps,” to compare to the subject property. Put simply, comps are similar homes that have recently sold in the area.
5 Tips For A Successful Home Appraisal
Thoroughly Clean Your Home
First impressions count. If you want to make the best impression possible on your appraiser, make sure your home is clean and presentable. Although the appraiser won’t value your home less simply because of it’s decor or cleanliness, it’s still important to present it in the best light possible. A messy or unclean home could lead the appraiser to believe it hasn’t been well taken care of and may have other issues.
Red flags include things like water spots, peeling paint, damaged siding, and broken appliances. If you have time to make small repairs and spruce up your home before the appraisal, you should take the opportunity to do so.
Make the Appraisers Job Easy
To appraise your home, you are often busy and often having to travel to several different homes in a single day. You can make their job easier by providing them with all of the information they need about your home upfront. Creating a spreadsheet of important information, such as the age of the roof and HVAC system, can save a lot of time. In addition, providing the appraiser with details and receipts for any updates you’ve completed in the home can help them value it more accurately.
Be Warm and Welcoming
If you’re going to be at home while the appraiser completes their inspection, greet them with a friendly welcome. Appraisers rarely spend longer than 30 minutes in a home — unless it’s particularly large — because they’re usually on a tight schedule. It’s essential to give them the space they need to maneuver around your home with ease. If you have information about the area that you think is important, such as recent sales of comparable homes, be sure to mention that to them once their inspection is complete.
Have Realistic Expectations
Unfortunately, home improvements rarely raise your home’s appraisal value dollar for dollar — unless it’s an extra bedroom. Appraisers tend to focus only on your home’s overall lot size, square footage, and the number of bedrooms and bathrooms. This means that although your bathroom remodel may have cost $15,000, it’s unlikely the full amount will be reflected in the appraisal.
Prepare For Further Negotiations
To appraise your home for higher than the agreed sale price, you probably won’t find out. However, if the appraised value is lower than what the buyer agreed to pay, you’ll likely have to reenter negotiations. This is because the buyer’s lender will only offer them a loan amount for the home’s appraised value — leaving the buyer to make up the remaining difference.
Typically in this situation, the buyer or their agent will come back to you and request a reduced sales price. Usually, it’s in everyone’s best interest to find a middle ground price that each party is happy with. If you can’t reach a compromise, the buyer must find the additional fund themself, or the deal will fall through.