One of the main concerns sellers have when they put their home on the market is the home appraisal. The appraisal is one of the biggest hurdles to clear in the real estate sales process. In fact, Realtor magazine lists appraisals as the reason that 20% of home sales are delayed.
Unfortunately, a low appraisal value can make or break your deal — leaving both you and the buyer in the lurch. If you’re concerned about your appraisal, there are some things you can do to help ensure you head to the closing table smoothly.
Here are four handy appraisal tips that all sellers should know.
What Is a Home Appraisal?
A home appraisal is a professional opinion of the value of your home. Home appraisals are generally only required if the buyer is financing your home’s purchase with a loan. However, some cash buyers also choose to have their own appraisals conducted. Because appraisals can significantly impact the final sales price, it’s crucial that they’re unbiased and accurate.
A qualified appraiser must conduct an appraisal. The buyer’s lender is typically the party who hires the appraiser, and it usually takes place after the buyer has completed their property inspection.
As part of the appraisal process, the appraiser will inspect your home’s overall condition. They will also make a note of details such as the square footage, how many bedrooms and bathrooms there are, and what the surrounding homes are selling for. This is known as using “comparables,” and helps the appraiser determine your home’s value.
4 Must-Know Home Appraisal Tips
Prepare For Your Home Appraisal
Although your home’s cleanliness won’t affect its value, it’s important to remember that first impression count. Presenting your home in the best light possible is crucial to a successful appraisal. A home that’s unclean or full of junk doesn’t show well. In addition, obvious repairs and issues could be a concern for the appraiser — and your property value. If you have time to spruce up your home, try to make small repairs, like leaky faucets, before the appraisal.
Provide Information About Your Home
Appraisers often travel to several different properties a day. You can make your home their easiest job by providing them essential information about your home upfront. For instance, creating a document with the HVAC system’s age, roof age, and any updates you’ve made can save them time — and ensure they have an accurate idea of your home’s condition. Plus, it gives you an opportunity to showcase any high-end finishes or remodels you’ve completed.
Be Realistic With Your Home Appraisal
Appraisers typically focus their report on a home’s square footage, the number of bedrooms and bathrooms, and overall lot size. Although finishings and materials play a part in the calculation, home improvements rarely raise an appraisal value dollar for dollar. Put simply, paying $20,000 to have your master bathroom remodeled in marble doesn’t mean your expense will be reflected in the appraisal value.
Prepare To Negotiate
If your home appraises for less than the agreed sales price, don’t panic. Although this can be stressful, it doesn’t have to kill the deal — as long as you’re willing to negotiate. As lenders will only offer a loan in the amount of a home’s appraised value, the buyer will usually request a reduction in the sales price or make up the remaining difference from their own funds.
If the buyer requests a reduced sales price, it’s typically in everyone’s best interest to try and come to an agreement. If both parties can’t reach a compromise, the deal will fall through, and you’ll have to put your home back on the market. It’s important to remember that unless your next buyer pays in cash, you’ll likely face the same dilemma again.