I’m selling my home: should I get my own appraisal?Many appraisers use Fannie Mae's Uniform Residential Appraisal Report, which was created to allow for standard reporting and analysis of
Appraisal is the number two factor that can delay or terminate a contract
Dated: November 10 2020
Appraisal is the number two factor that can delay or terminate a contract.
What Is An Appraisal?
There’s no getting around a home appraisal if you want to refinance, sell a home or take out a mortgage.
An appraisal provides an estimated value of a home as determined by an inspection of the property and comparison of recently sold homes in the area. The lender orders an appraisal, but it is conducted by a licensed, third-party appraiser who is independent of the buyer, seller or lender. In that fashion, all parties can be sure the determined market value is fair, unbiased and free of any influence from any party that could benefit.
(Note: Appraisal for property taxes, Many jurisdictions use one of three approaches to assess a property: (1) sales comparison approach, (2) income approach, or (3) cost approach. Higher appraised value of a property has no impact on its assessed value.)
Why Is An Appraisal Important?
In a purchase transaction, an appraisal provides cover to the buyer from paying more than the house is worth. In a refinance or an initial financing, an appraisal prevents the lender from lending more money to the homeowner or buyer than the home is worth. And if you’re selling your home, you and your real estate agent pick a listing price, but if an appraisal comes in low, you’ll most likely have to lower that price.
Issues arising from an appraisal represent the second most common reason a sale is delayed or a contract is terminated. As of September 2020, “appraisal issues” were the cause of 21% of real estate contract delays, second only to issues related to obtaining financing (29%) according to the National Association of Realtors (NAR). What’s more, appraisal issues were the cause of 13% of contract terminations.
How Much Does A Home Appraisal Cost?
Appraisals usually cost $400-$500 depending on the home’s size, location, and the condition the property. The borrower pays the appraisal fee, which is a nonrefundable, upfront, out-of-pocket cost in case either party fails to move forward with the sale.
What Do Appraisers Look For?
The appraiser’s job is to assign a total, fair market value to the property. In order to do this, they need to look for certain things that can affect the price or impact the lender’s decision to loan you money for the home. These are:
• Health and safety hazards
• Structural integrity of the home
• The condition of the home
• Upgrades or improvements
• Visible defects
• Any conditions set by the lender
Interior Checklist to increase my home’s appraisal value:
You can expect the appraiser to look at these things when they inspect the inside of the home:
• Amount of livable space
• Number of bathrooms and bedrooms
• HVAC system is in working condition
• Type of basement or crawl space
• Open concept floor plan
• Built-in appliance upgrades
• Any lead or peeling paint, but only if the house was built prior to 1979
• Quality of the electrical and plumbing
• Material and conditions of the walls, floors and windows
• Evidence of termites or pests
• Energy-efficient features
• General upkeep of the home
• Permanent upgrades
Exterior Checklist to increase your home’s appraisal value:
Here are a few things the appraiser looks at on the outside of the home:
• Total land area or acreage of your property
• Condition of the roof and foundation
• Condition of the chimney
• Condition and type of driveway surface
• Home’s curb appeal: The outside of the house is the first thing a potential buyer and the appraiser will see when they arrive. If curb appeal is low, the home starts off at a lower appraisal score.
• Quality of the landscaping: Add texture with Landscaping
• Condition of the pool, if there is one
• Type of garage
• Home’s structural integrity
What can I do to increase my home’s appraisal value?
There are a lot of things you can do to get a higher appraisal value. For example, curb appeal can greatly impact a home’s value, so it’s considered in the appraisal. The overall look of your home can have a big impact on your home’s appraisal value.
A home that looks well-taken care of may have a positive effect on an appraiser’s opinion of the condition of the home. If the look of the home makes an appraiser feel welcome, comfortable or any other positive emotion, they might subconsciously put a higher value on the home. The opposite is true if an appraiser gets repulsed by the home’s appearance or finds it cold and unwelcoming.
Follow these tips for improving the appearance of your home before an appraisal:
• Mow your lawn, trim bushes, rake the leaves or shovel the pavement to create a clean – and safe – appearance.
• Plant new flowers, lay new mulch and touch up outside paint to quickly update the exterior.
• Add soft touches to the interior decor with blankets or plush throw pillows to add a hint of comfort.
• Declutter the home. Even though it doesn’t change the physical measurements of the home, decluttering can make a room feel bigger and more usable.
• Replace hardware such as drawer handles and doorknobs to add more shine.
• Set your thermostat to a comfortable temperature to increase comfort and showcase how the heating or cooling works.
• Remove any off-putting odors, including garbage, items in the fridge, cooking, dirty laundry or pets.
• Clean the home to make sure the appraiser is seeing every feature in its best light.
Finally, here are some other factors that might cause an appraisal to come in low:
• Bad or outdated comps: Home prices in the area might be increasing so quickly that the comps that sold six months ago don’t yet reflect this improvement.
• A lack of comps, which might force the appraiser to use comps from a nearby—and possibly less desirable
• An inexperienced appraiser who is unfamiliar with the nuances of the local market and may use poor market comparisons.
• Home improvements that don’t add as much value as originally thought
• Unrealistic expectations of the seller or real estate agent
If you are thinking about selling a home and/or buying a home in the Washington DC area, don’t hesitate to reach out at Dell@DellResidential.com
Dell Jeanty is a licensed real estate agent serving the Washington DC area. He is Well-informed in All facets of the Real Estate Process. He’s provided stellar customer service and care in the Washi....
Latest Blog Posts
Appraisal is the number two factor that can delay or terminate a contract.What Is An Appraisal?There’s no getting around a home appraisal if you want to refinance, sell a home or take out a
Does it matter which Real Estate brokerage an agent associated with when I choose to Sell My House?Does the real estate agent I hire really make a difference which real estate company he is