Saturday, April 27, 2019 / by Connie Tracy
What is an Appraisal Report?
The appraiser sends the report to the lender taking note of the value of the home and how it was reached. Lenders are required to give buyers a copy. It may include the following:
* Condition of the home and notes about the neighborhood
* Information about upgrades
* Interior and exterior pictures
* Maps of the parcel and home
* Information about the comparables
* Description of how the appraiser determined the home value
* The home's value
As a seller, it is helpful to have the home appraised for a higher value. Here are some steps to give the appraiser the best possible impression of your home.
1. Keep receipts or pictures of recent upgrades or renovations
According to some appraisers, renovations made in the past five years are most valuable. However, even if it has been more than five years, you may want to mention it. Take note any newer appliances that are part of the home such as a new dishwasher or stove. Having this ready before the appraisal is key. You want to make sure all the upgrades are taken into consideration during the appraisal.
HINT: Make a list of ALL the upgrades and keep it handy. That way when the time comes to sell your home, you will have it ready for the appraiser.
2. Clean the house
Make your home look nice and clean. If you have laundry piled up on the dresser, that is not a deal breaker.
The appraiser is looking at the overall structure of a home and trying to imagine it without furniture. He checks the flooring, fixtures, and upgrades. The cleaner the house is, the more those key items will shine. The better it shows, the better the value's going to be.
3. Hire a home inspector and note any repairs
When you hire an inspector, you will know what may get called on an appraisal and bring your home value down. This will give you a chance to get your repairs done before the appraisal.
Appraisers look at inspections maybe 5-10 percent of the time, and only if they have any questions of the home, if they suspect any problems, such as a leaky roof or cracks in the foundation) or if the home has been vacant. Appraisals are not as thorough as an inspection.
Note: Appraisals are more about the square footage and comps than the exact home condition.
4. SELLERS: If the appraisal comes in lower and is accurate, you may have to lower the price of your home. You don't have to accept a deal if you specified in the contract that your property be valued at a selling price or higher.
5. BUYERS: If the appraisal comes in at the same or higher value than the contract price, the transaction continues as planned. If it comes in lower, this can delay the transaction or even stop the sale from happening.
If you negotiated a loan contingency, a low appraisal may actually work out in your favor. You can ask the seller to lower the price of a home to reflect the value the appraiser reached. But you do run the risk that the seller may not budge. So, if you REALLY want the home, you can put down more cash to cover the gap created by the appraisal value and the sales price.
Whether you are a seller or a buyer, it is really important to understand how the appraisal process works. This will only benefit you!