All Your Need to Know About the Home Appraisal Process

Buying or selling real estate is a tedious and complex process with numerous important steps. But one at the top of the list includes getting an appraisal. If you’re wondering what an appraisal is and why is it so important? This article by Fred Amendola will take you through the basics of an appraisal, how to get one and the impact it can have on your real estate transaction.

What Is an Appraisal?

As a seller, after consultation with your real estate agent, you will set an attractive price for your property to lure potential buyers. After visiting your home, there will be a handful of interested buyers who will put forward their offers. After you have accepted an offer, the buyer will initiate an appraisal for the home.

An appraisal is an unbiased estimation of the property’s current value conducted by an independent third party. This is often considered an important step for buyers to ascertain whether the asking price is ideal or inflated.

What Is Included in an Appraisal Report?

An appraiser will conduct a thorough inspection of the home, its outdoor areas, and the housing market performance where the property is located. Here are a few notable aspects which will be included in the report:

?       Details about the condition of the property.

?       Comparison of the home with other similar properties in the area.

?       Notable features which have reduced the property’s value, such as bad maintenance.

?       Any major issues with the property such as structural damages, non-functioning plumbing/electrical system, etc.

After all due diligence is completed by the appraiser, they will provide a clear estimation of the property’s value. This estimation will then be shared with all stakeholders such as the seller, their real estate agent, the buyer, and the buyer’s lender.

In addition to hiring an appraiser, buyers can also get a personalized estimate of the property’s price using an online home value estimator.

How to Boost Your Appraisal Value

As reported by How Stuff Works, being a seller, you want the appraisal value to be in line with your asking price, or higher. To ensure you get the desired appraisal value, here are a few important things to keep in mind:

?       Before putting your home on the market, complete all necessary major and minor repairs. Even small items such as stained carpets, faded paint, and chipped floorboards can negatively affect your report.

?       Share with the appraiser a list of all major repairs made in the recent past, such as roof replacement, kitchen/bathroom remodeling, new plumbing system, etc.

?       Focus on improving your curb appeal, which can include landscaping, repainting your home’s exterior, upgrading your driveway, and more.

Having a home that visibly looks old or rundown is bound to make a negative impact on the appraiser. Hence, invest time and effort into modernizing your home through upgrades, modifications, and cleaning.

Impact of an Appraisal

As reported by Journals Star, buyers often apply for a mortgage based on the asking price and a low appraisal can put your deal in jeopardy. For instance, if both parties agree on the price of $150,000, but the appraisal value comes to $120,000, the buyer’s lender will only sanction the mortgage up to that amount. This puts the burden on the buyer to come up with the balance of $30,000 from their pocket. In such situations, here are some probable measures to take:

?       The seller can lower their asking price to the appraisal value.

     ?       The asking price can be reduced to a mutually agreed amount, such as $140,000, depending on the buyer’s capacity to pay                out of pocket.

     ?       An appeal for Reconsideration of Value (ROV) can be filed, which should include supporting evidence explaining why the                  property’s value is in line with the asking price.

Given the difficulties a low appraisal can cause, as a seller, it is important to keep your property in top condition before an appraisal.

To ensure a smooth appraisal process, choose to work with an experienced real estate agent who can help accurately price your home and suggest necessary modifications.

 Emma Croft