How you can get the best, most accurate appraisal when selling your home.
Let’s face it. Appraisals make people nervous. Whether you are buying a house or selling a house a lot depends on what value an appraiser puts on the property. You may think the world of your house, but you are depending on a total stranger to give the real estate market an unbiased opinion about the place you have called home for a long time.
So what are these professional appraisers looking at when they come to your house and what can you do to make the experience better for everyone concerned?
When an appraiser looks at your house they are looking at roughly seven things.
- Neighborhood Comps
- The Exterior
- The Square Footage
- The Interior
- Any Repairs or Upgrades
- Any Amenities
- And the General Condition of the Property
What are Neighborhood Comps?
Comps is short for Comparables. Appraisers look at homes in your neighborhood (Some time in a mile or two radius from your house) to see what houses that are comparable to yours have sold for in the past or what they are currently appraised for.
When you are talking about a house that is comparable to yours, you are comparing apples to apples. If your house is one story you are comparing it to other one story houses. If your house is 3,500 square feet with 3 bedrooms and 2 baths you wouldn’t want to compare it to a house that had, say, 7,000 square feet and 5 bedrooms.
When an appraiser looks at houses in the same location as yours that are pretty much equal in size and quality they can get a pretty good baseline price for what your house would be worth.
Having said that, there are other important factors the appraiser should consider.
What is the condition of the home’s exterior?
Before they even come inside the house, an appraiser will be checking any issues you might have that are visible from the outside.
The most important things to consider are:
- The condition of the roof
- Any issues with the foundation
- Outside water drainage issues
- Any health and safety concerns
- The general maintenance and upkeep of the homes exterior
If at all possible you should repair or replace any of these issues before putting the house on the market. You should also disclose any repairs you have made at the time of the appraisal. A new roof will go a long way to getting you a higher appraisal.
How much square footage do you have?
Since the appraiser is comparing your property to others of roughly the same size it is important that they verify the actual square footage in your home.
There may be a square footage on file with the city but it is not always accurate as it does not always reflect any additions to the house in recent years. The appraiser will spend some time measuring the house for their records.
There isn’t much you can do here to help so let the appraiser do their job. Multiplying the square footage by the general Price-Per-Foot is the starting point for pricing your house.
Inside the house
The first thing you can do to possibly improve the appraisers opinion is to present them with a clean and safe place to work. They are going to be going all over the place, checking and measuring and if they have to spend the day climbing over clutter or wishing they had worn a hazmat suit, they are not going to be in a good mood when coming up with the final value for your house.
Other than measuring your house the appraiser will be looking at:
- Windows
- Doors
- Flooring
- Walls
- Plumbing
- Electrical
- HVAC
- Kitchens
- Bathrooms
You should make sure that everything works as it should, disclose beforehand everything that doesn’t, and let them know if you have recently repaired or replaced anything.
Have you made any repairs or upgrades lately?
Improvements to your home can affect the price. If you installed a new kitchen or bathroom in the last year or so, that’s important.
Have you just put in a new HVAC? GREAT. The appraiser needs to know it.
You should give the appraiser a clear list of any upgrades or repairs you made. Include the cost of the upgrade and the date it was made. It will all be taken into consideration.
Having said that, it is also important that you don’t over improve for your area. If your house is small and in an area of homes that cost, let’s say $80,000. Installing an Italian marble shower in the master bath is not likely to help with the price of your house. People looking for those sorts of amenities will be looking in other areas.
Speaking of amenities
Are there any parts of your house that make it stand out for the others in the neighborhood?
Does it have a pool or an outside kitchen/party area? A workshop or greenhouse? How about an elevator or theater room?
These are the sorts of extras that can not only drum up interest in your house but can add value to the appraisal.
The general condition of your property.
First impressions count. If the appraiser parks at your house and sees a house with a yard that needs cutting or trash in the yard it sets the tone for the rest of the visit.
If the inside of your house smells or is cluttered and dirty it can have a negative impact on the appraisal.
Why? Well an appraisal is just “one person’s opinion” A poorly kept home can shape this opinion and might lead the appraiser to think that the house has not been properly cared for in general.
On the other hand, if everything is nice and tidy, the appraiser has no reason to believe that you are anything but a conscientious home owner.
What are your options if your appraisal comes in lower than the price you are asking for?
As I said before, an appraisal is just one person’s opinion. But it is an experienced and state licensed person. In general they will make a fair and accurate assessment of your property.
The best way to avoid a low appraisal is to price your house fairly from the start. Your real estate agent can provide you with comps so that you can set a price that is right for your house and area.
If you feel you have done this and the appraiser has priced the house considerably lower, the first thing you can do is check over the appraisal carefully. Mistakes can happen and a transposed number can have a huge effect on the appraisal report.
In addition, your real estate agent should be able to supply you with their own appraisal and you can ask for a “Reconsideration” of the appraisal if there is a large discrepancy.
If you have covered all of the options and the appraisal seems solid you will just have to re negotiate the price with the home buyer. The appraisal affects them as much as it does you.
Even if the home buyer loves your home and is willing to pay your price even if it is higher than the appraised value, they cannot get a home loan or get homeowners insurance for anymore than that appraised value.
In the end appraisers are trained professionals. If you take care of your house all you can do is let them do their job during the home inspection, and try not to follow them around pointing things out. Nobody likes that.