What To Know About House Appraisals
Home appraisals are generally done when buying a home using a mortgage, refinancing a high-rate mortgage, or selling your home to anyone who’s not an all-cash buyer. It involves an unbiased and professional opinion of a property’s value.
A qualified appraiser does a thorough visual inspection of the home and prepares a report based on factors, such as recent sales of a similar property in the neighborhood and current market trends.
They also consider aspects like the amenities, upgrades, floor plan, and area in the square footage. The appraisal is a significant part of the process of closing on a house unless the buyer is paying cash.
A lower home appraisal value can delay or derail the transaction. Therefore, it’s important to prepare before an appraisal so that an unbiased entity aptly assesses your property’s value.
Whether you plan to sell your residential property or refinance your conventional mortgage, you’d surely want the transaction to fall through. Hence, it’s critical to know what to expect from a home appraisal. When selling a home, it is crucial to prepare for the arrival of the appraiser.
Read on to know everything about home appraisals!
What’s The Point For A Home Appraisal?
As per the National Association of Realtors, the primary objective of a home appraisal is to assign an unbiased and independent value to a real estate property. In a home sale transaction, an appraisal determines whether the home’s price on contract is appropriate.
In a refinancing transaction, an appraisal assures the lender that they aren’t offering the borrower more money than what the home’s worth.
When Does the Home Appraisal Take Place?
The appraisal usually happens when the buyer and the seller have roughly worked out the financials like the price, repairs, and credits. Once that’s done, the lender will send an appraiser to assess the property’s market value.
If you plan to put your house on sale, you can opt for a pre-listing appraisal (done before listing a home for sale) that can help you set a realistic market-based list price.
Who Pays For The Appraisal?
A buyer or seller cannot directly order an appraisal from the firm of their choice. The lender goes for an unbiased appraisal management company for an independent opinion. An appraisal costs several hundred dollars, and the borrower pays the assessment fee.
What’s The Appraiser Looking for?
All licensed appraisers use the Uniform Residential Appraisal Report that asks specific questions about the neighborhood dynamics, the house’s condition, the available amenities, the square footage, and other details.
Here are some of the essential factors an appraiser will pay attention to. When you sell a home, it’s essential to understand these to prepare your property before the evaluation.
They will check factors like the location, home structure, property age, condition of the roof and gutters, construction quality, parking, and neighborhood. They’ll also check for safety concerns like broken windows, damaged stairs, rotten decks or railings, and stairs with missing guard rails.
Besides checking out upgrades, the appraiser will assess the square footage, the functional layout, the utilities, the safety concerns inside the house, the structural integrity, and the code compliance.
The condition of the flooring is also critical. In fact, when evaluating property interiors, appraisers tend to start with the flooring.
The objective is to keep the house in top condition. Your home should come across as a well-maintained and functional property. If the appraiser sees that the property is maintained in good condition, they will assign a good value to it. As a home seller, it makes sense to make improvements, even if they are small items.
What Measures Can You Take To Prepare A Home For An Appraisal?
Your home appraisal can hugely affect the success of your refinancing or property sale or purchase. These appraisals also affect the interest rate as lenders consider borrowers with less equity to be risky.
So, here are a few ways you can prepare your home in a way that positively affects its appraised value.
Consult A Home Inspector
Along with the other factors, the appraiser will be considering the interior and exterior condition of your home. Hence, you should invest your time and efforts in assessing whether or not your home is in good condition. Hire a home inspector who will go over your property and uncover any issues that may negatively affect the appraisal outcomes.
Take a moment to inspect your home and get rid of anything that stands out as a threat to one’s safety. For instance, repair damaged stairs, leakage in the roof, and unfinished floors.
As mentioned earlier, flooring is one of the first things appraisers tend to notice. Make sure you install a durable and attractive surface that will create a good impression on the property appraiser.
This is also a good time to complete any pending remodeling work, as unfinished projects can negatively affect your home value. Upgrading your kitchen and replacing countertops can also make a huge positive impact on your home’s value.
Finally, get rid of clutter in the house, inoperable vehicles parked in the garage, and excessive moss on the roof. Such things can devalue your home.
Invest In Low-Maintenance Landscaping
Planting a few attractive florae can boost the overall curb appeal of your property and improve the air quality around the house. Pull out the weeds, mow the lawn, and trim the hedges to make sure the front of your house looks neat.
You cannot pull up the home value only with curb appeal, but it will surely reinforce the fact that your home is well-maintained and problem-free.
Address The Safety And Health Concerns
Besides evaluating your house’s condition and functional value, an appraiser is bound by law to determine whether your house is safe for living.
Does your home have mold or mildew issues? Do you have carbon monoxide detectors installed? Do the bars on your windows have safety latches? Have you had any unpermitted additions to your home? It’s wise to address these and any other safety and health concerns before an appraisal is scheduled.
Keep A List Of The Upgrades Ready For The Appraiser (In Case They Get Missed!)
Homeowners aren’t required to leave when the appraiser is assessing the property. So, you can surely help the appraiser notice any value-adding features in the house.
Did you recently replace your kitchen countertop with epoxy surfacing? Have you taken measures to make the house more energy-efficient? Did you upgrade your deck with composite wood? If yes, it’s time to point them out to the appraiser. Doing so will help them measure the upgrades against those of comparable properties.
Make a list of such upgrades and have them ready before the appraiser arrives.
Everything hinges on the home’s appraisal when buying or selling a house or refinancing your mortgage. In a world where everyone’s suspicious of the other, unbiased appraisal can help offer a property’s fair market value, thus guiding the buyer, seller, or lender every step of the way.
Regardless of what role you are in, the information in this post will help you understand how an appraiser determines a home’s value.