A home appraisal helps you determine the value of your estate. It’s part of the formal procedure before listing your house on the market, and you need to hire professional realtors for the job. Unless you get your home appraised, you won’t know how high it ranks on the market and what price to quote for it. This additionally helps if you want to refinance, and there’s a mortgage involved in selling the property.
A home appraisal gives both buyers and sellers an objective, unbiased picture of the property value. You can negotiate around this figure and settle on a closing price.
Qualified appraisers usually look at the number of bedrooms, bathrooms, home amenities such as HVAC appliances and plumbing system, floor plan, and the total square footage of the place. They will inspect the entire space, including the indoor and outdoor spaces, to determine the house’s aggregate value. They’ll identify damages that need to be repaired and advise the seller accordingly.
Let’s look in detail at what home appraisals entail and important factors that you need to note as a seller.
More About Home Appraisals
If you’re participating in a sale-and-purchase deal in the housing market, you’ll need a professional’s opinion on how much your house is worth. That’s what an appraisal is. It determines if the contract price of the property is a reasonable demand made by the seller.
They’re commonly used in refinance transactions because it ascertains the lending institution that the borrower isn’t asking for more than needed. Since borrowers sign up an asset as collateral (usually their house) against the loan, lenders need to know if it’s worth the amount being loaned. This acts as an assurance that they can withhold their home if the borrower isn’t able to pay off their mortgage loan.
What’s the Appraisal Process Like?
The appraisal process is in place primarily to protect the financial institution’s interest in extending a house loan. The borrower is liable to pay the fee for the appraisal to a licensed appraisal institute. As per the rule in 50 US states, the appraisers hired for the job should have the certification to practice legally and have information about the local area. The federal law dictates that the appraiser should be impartial to both the buyer and the seller and maintain neutrality in the housing transaction.
The appraisal itself depends not only on the condition, size, and space of the property that affects the appraisal value. The sale and purchase activities in the local housing market also affect the value of your property. They use the Uniform Residential Appraisal Report to describe the property’s interiors and exteriors, location, and comparable sales in a short-mile radius.
The report includes the following points:
- A street map locating the appraised property and comparable property sales in the local housing market
- A sketch of the property’s exteriors
- An explanation of how the square footage was measured
- Picture proofs of the property’s front, back, and neighborhood
- Picture proofs of the front exterior of each comparable property
- Other information—such as market trends, record sales, public land records, and public tax records—that would affect a fair estimation of the property value
Based on this information, the appraiser derives a conclusion about the property value of your house.
Pointers for Home Sellers
A low appraisal affects the price you can quote to prospective buyers. Therefore, it’s in the seller’s best interest if the house is appraised as high as possible. However, if you can find an all-cash buyer, you might be able to evade this requirement throughout the closing process.
But bear in mind that the buyers will also have an attorney, realtor, and home inspector on their side, to verify the value of your property. They’ll do everything possible to bring the price down, and the only way you can stand your ground and still manage to sell is if you have legitimate proof (aka the appraisal) to back your claim.
Property sellers should also know that distressed sales in the neighborhood will affect their house’s selling price. Nearby foreclosures and short sales can drag the quote on your property down as well. The only way to compensate for this disadvantage is through home improvements. If your property looks significantly better than other options in the locale, buyers might reconsider their decision.
It’s not binding to schedule a home appraisal when you decide to dispose of your property. You can get it done anytime, but since it costs a few hundred dollars, property sellers like to save this expense until it’s necessary.
Once your house is listed on the market and buyers approach you with an offer, they’ll ask for proof of home appraisal. They’ll probably urge you to schedule a date for the assessment if you haven’t already got it.
Tips to Remember Before An Appraisal
Think Like a Potential Buyer
When you put yourself in a potential buyer’s shoes, you realize where the wood starts to fade or the corners where the paint is peeling off. These may be minor details, but they add up to have a cumulative dampener on the home appraisal value. Exit your house and re-enter with a new frame of mind. Think of all the things you’d like to see in your home, room by room.
If the door needs new polish or the glass windows need cleaning, get to it. If the bathroom drains need cleaning, call the plumbers. If you can rearrange the furniture for more visual space, move it around. If you can invite more daylight into the house, welcome the sun inside. If you want the odds to be in your favor, you need to get rid of all the things that look odd.
Get Creative with Spackle
Cosmetic fixtures are cheap, quick, and do the job. You don’t want to be wasting more time and money on permanent repairs and replacements if you’re going to sell your house. That’s where spackle comes in to save the day.
Over the years, you may have hammered a nail in the wall to hang a photograph or a painting. And if you have a full house, accidents are likely to happen and leave marks on the walls. You can conceal all the holes and cracks with a layer of plaster. Spackle is a kind of putty that fills up the damages and reinforces the house’s structural integrity, which will make the marker shoot up on the appraisal chart.
Apply Fresh Paint
Remember how your house felt when you got the paint renewed? That’s the magic fresh color does to walls. White or light-colored walls tend to become stained and discolored over the years. They’re badly in need of some touch-up, which also conceals all the pen marks and drawings your children may have made on them. When the appraisers come in to inspect your place, the newly painted walls will work like a charm. But it’s safe to have a realtor on your side while the appraisal happens.
Phillip Fehler is a real estate broker at Fathom Realty. His experience in the real estate industry has granted him expert knowledge of the property market. He has offered his real estate brokerage services to many residential clients in Fayetteville and Fort Bragg in North Carolina.
His clients have always returned with positive reviews for his work ethic, commitment, knowledge, and service quality.