Home appraisal: how it works and how sellers can improve it

Home appraisal is less expensive than inspection it costs about $300 dollars on average.

Home appraisal is the process aimed at determining the true market value of a house, so that the mortgage company or a bank receives the unbiased estimate of what the property the buyer is trying to receive the mortgage for and makes sure that the amount of money the borrower asks for is appropriate for that exact house.

The thing that makes the appraisal process so stressful and deal breaking for both parties involved in the sales-and-purchase agreement is the fact that it takes place after the seller and buyer have gone through the negotiation process, agreed on a certain price they’re both most comfortable with, spent a good share of money on lawyer’s services, signed the contract and approached the few last, but particularly tense steps to closing their real estate deal.

In fact, both homebuyers and sellers underestimate the importance of the appraisal process until they face the bank that isn’t willing to lend the selling price the sides have already settled on due to the fact that the appraisal received from a real estate agent or a property valuer came to be lower than the mortgage claim.

In this situation, the deal the homebuyer and the seller have already sealed is most likely to be over unless the seller agrees to lower the price to meet the bank’s requirements, the borrower finds another bank ready to finance the mortgage to the fullest extent or manages to gather the difference between the seller’s price claim and the sum covered by mortgage in cash to fulfill the seller’s requirements and not to abandon the deal he has already spent so much time, money and effort on. The aforementioned scenario is too idealistic to have something in common with real life, as rare reliable financial institutions are willing to lend more than the essential appraisal stated. There’s no wonder that most sellers, who’ve already dropped the price for their property during the negotiation process, do not agree to decrease it even more. Surely, the buyer isn’t interested to pay more than the home’s estimated worth as well.

Consequently, it’s rather important for home sellers to thoroughly prepare for the home appraisal process to avoid failed deals, losses in value and time wastes. Obviously, the appraisal professional is an independent expert, who provides adequate home selling price estimates without being subjected to the seller’s and agent’s direct influence.

However, there’re a few tricks and preparation steps one may take to get a positive appraisal, finalize the deal with the buyer and receive the money your house deserves to be sold for.

Everything you need to know to prepare your house for an appraisal

1. Get educated about the details of the appraisal value determination process to know what the experts conducting the evaluation pay attention to

This article’s purpose is not to give an exhaustive description of the appraisal procedure, but rather provide the sellers with a few pieces of advice on how to improve its results. But, we’re going to base the further info considering these most important facts about house appraisal:

• • its real purpose is to figure out whether the home’s value expressed in the monetary equivalent (the selling price)coincides with the average prices of similar local properties, which have been recently sold or which are currently available on the market;

• • it takes the evaluation expert one 45-60-minute visit to collect the necessary data for his conclusion;

• • it’s safe to say that home appraisals are normally carried out to protect the interests of the lender and prevent the excessive crediting – the home value’s estimate is used as the maximum amount of money the bank may offer to the borrower to finance the mortgage of the house, that is the subject of the contract;

• • even though the expert conducting the appraisal is supposed to be independent, honest and unbiased in his estimates, it’s the bank/mortgage company who orders his services and becomes his client – more often than not the evaluation expert is going to make sure that the client doesn’t invest in the property more than its actual market cost;

• • in most cases, lenders don’t accept appraisals from experts they haven’t approved for a particular appraisal;

• • the process doesn’t take too much time – home appraisal is far from being as deep as home inspection homebuyers order to receive a professional inference on the condition of the property they’re particularly interested in, identify its possible hidden flaws, understand the true value and continue the negotiations guided by the inspection’s results; home appraisal is a brief estimate conducted within an hour or so;

• • the things appraisers pay attention to are: lot size, square footage of finished and unfinished space, the overall condition of the property, upgrades that boost its value, style and age of house, garages, fireplaces; when those are reviewed, the property’s value is compared to the selling prices of similar houses within the same neighborhood and the mortgage limit is determined;

• • home appraisal is less expensive than inspection  – it costs about $300 dollars on average and most lenders include it in the mortgage costs;

• • house appraisals are also carried out during mortgage refinancing initiated by the borrower.

2. Think about what you can do to get your home appraised in your favor. According to the sellers and appraisers, these measures tend to work the best:

• • Get your home deep cleaned professionally to make sure that its true value isn’t hidden under the dirt and dust that’s accumulated over the years.  Hire house cleaning specialists to get your windows washed, your walls cleaned, your kitchen spotless, your wooden floors polished and your carpets steam cleaned. Tidy homes look more attractive to appraisers, as the cleanliness is a sign of a well-kept property.

• • Point out the most recent upgrades and additions you’ve carried out, as those boost the property’s value and reflect on the expert’s report in the most positive way. Let the appraiser know that you’ve installed new kitchen cabinets, refinished hardwood floors, upgraded plumbing, replaced windows, installed new energy-efficient HVAC units, protected your household by an advanced security system, replaced bathroom tile or got new carpet not too long ago. Even the smallest details may make a significant difference.

• • Consider minor repairs and sprucing up. Walk around your house paying close attention to the damage the expert’s critical eye may notice and use as one of the reasons to give a lower appraisal. No roof leaks, loose floor boards, shabby windows, dirty gutters, scratched walls and other flaws are allowed. Fix everything that has to be fixed, repaint walls, install new blinds or refinish kitchen cabinets. If you have some money to spare, think about hiring remodeling contractors to replace obviously outdated things like countertops, bathtubs, linoleum floors or garage storage.  Do everything you can to prove that you’ve maintained your house in a great condition and showcase its modern, but not outdated appearance.

• • Get your yard picked up. It has to look as nice and organized, cause appraisers pay just as much attention to the lot as to the house. Clean driveways, neat fences, mowed lawns, trimmed trees, a well-kept landscape and a patio, a good-looking curb and maintained house exterior make a positive impression on appraisers, as these factors indicate the property’s condition.

• • Conduct your own market research. It goes without saying that appraisers gather their own data regarding the value of similar properties and the prices they’re sold for in your local area. But carrying out your own research to have a few real numbers justifying the appraisal price your claim, determine the common problems similar properties faced during their appraisal, as well as understand what you may realistically hope for and what else may be fixed prior to the expert’s visit.