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Home Appraisal Tips Experts Wish You (the Seller) Knew

At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

A home appraisal is a complex process and it’s often one of the most confusing aspects of selling your home. Sure, you know that the home appraiser is the one who sets the price of your home, but how do they get there? What information are they using? Is there anything you (the seller) can do to make that number higher? If you don’t fully understand the job of a home appraiser, you’ll add unnecessary stress to the entire process. In this article we’ll address all the home appraisal tips the appraisers wish you knew, and give you some steps you can take to make the process easier on you and your home.

What Do Home Appraisers Do?

First of all, let’s define the role of the appraiser: The appraiser is an independent third-party responsible for determining the true, unbiased value of your home and property. How do they get this number? Appraisers combine information found in Comparative Market Analysis reports (also known as “comps”) and a brief (usually 30-minute) home inspection to arrive at a value.

What is a Comparative Market Analysis for Real Estate?

According to Investopedia, comps are “an examination of the prices at which similar properties in the same area recently sold.” This information is often obtained through existing reports made by real estate agents, which is the same assessment your real estate agent would do to determine the initial asking price for your home.

When Do Home Appraisals Take Place?

Home appraisals happen when you least expect them. You’d think that determining the value of your home is one of the first steps in selling it, right? Not exactly…

Why Home Appraisals Happen at the Last Minute in a Home Sale

Professional home appraiser Mike Turner of Turner Real Estate Appraisals in Los Angeles explains, “Appraisals are ordered at the 11th hour of a home sale.” In short, before an appraisal is ordered, the buyer has to sign a contract to buy your home for a certain price (determined by a comp), and then (and only then) will a home appraiser come in to verify that price. This is seen as “buyer protection” and in cases where a bank lender is involved in the sale, a home appraisal is actually required by law. “In an appraiser’s perfect world [the appraisal] would happen before contract— but from a Realtor’s view this would mean ordering ‘unnecessary appraisals’,” says Turner. “They’ve been doing this way for 40 years now.” The logic behind this is simple: home appraisals cost money and the listing agent doesn’t want to waste it by doing a bunch of appraisals that don’t result in a sale.

When Appraisals Happen Early-On

In some cases, especially when a seller isn’t working with a Realtor (also called for-sale-by-owner or FSBO), they might order an appraisal in advance. This is helpful in situations where a seller doesn’t have a Realtor to perform a comp, as this will allow them to set an accurate sale price for their home. Something to keep in mind though is that (at least in some case) you’ll need to do another appraisal later on, especially if a lender is involved and requests one.

How Home Appraisals Can Affect Sales

So what makes the last minute nature of home appraisals so complicated? Sometimes a buyer will have agreed to a price that falls above or below the value assigned by an appraiser. In these situations, it’s back to the drawing table; both parties are informed and offered a chance to adjust the numbers accordingly. “In the case where the appraised value comes back below purchase price, either the borrower can put down more money, cancel the deal or lower the purchase,” says Turner. “The buyer is notified and the lender is required by law— any non-public info the lender acquires must be shared with the buyer so they have a chance to make accurate decisions before closing— to share a copy of the appraisal with the buyer.”

What Adds Appraisal Value To Your Home (And What Doesn’t)

Now that you know how appraisals work (take a minute, that was a doozy— we know), it’s time to talk about what really adds value to your home and how you can work with a Realtor to communicate that value to an appraiser.

First, Understand How Real Estate Agents Help with the Home Appraisal

Here’s where working with an agent really comes in handy. In fact, let’s just be blunt, you’re going to need one. You can do some stuff yourself and there’s a lot of information and resources online but if you really want a thorough report, you need an expert to conduct it. A top real estate agent will walk through your home like an appraiser would, run detailed comps, and come up with a pretty accurate list price. Top San Marcos seller’s agent Nicolas Jonville, who ranks #1 for homes sold in the area, says, “We do comps, almost like a mini-appraisal that we share with the appraisers. If a seller does not have an agent they would have to provide useful comparatives, and not just by square footage. We compare by nearby homes we’ve sold, yard, location, and neighborhood info. Appraisers do evaluations quickly, so the more valuable and truthful information we can provide the better chance of getting the value.”

When Upgrades and Home Improvements Matter for Home Appraisals

Needless to say, there’s a lot to consider when assessing the value of a home, not the least of which being the renovations and upgrades that a homeowner has invested in during their time in the home. Says Jonville, “When we meet with an appraiser we provide a complete list of upgrades, by asking the seller if they can provide a spreadsheet of costs and dates of the upgrades. It’s important for us to be able to bring this to the appraiser, because the appraiser is very numbers-oriented.” An important thing for sellers to note here is that upgrades don’t always mean more value. Turner explains that upgrades matter more or matter less depending on where your home is located. If a home is in an metropolitan area for example, he maintains that 80% of that home’s value is based on its location, whereas in a rural setting that 80% in value would be the home itself. “If you’re talking 80% of the value is in [location], who cares if the stove was replaced last year or not,” says Turner. “If you’re in major metropolitan area, the condition of house is not a big deal. But if you’re in a rural area, like an outlying or less populated area, then this does matter.”

Source: (wavebreakmedia/ Shutterstock)

How To Succeed With a Home Appraiser

Working with an appraiser shouldn’t feel like something you have to study for. The nature of their work is to provide an unbiased report on your home, so there isn’t a whole lot you can do to sway their opinion. But there are a few things you absolutely should do.

  • Hire a real estate agent you trust and ask for a comp well in advance. He or she will likely do this anyway at the outset to determine the sale price of your home, but be sure you’ve arrived at something that feels accurate to both of you.
  • Work with your agent to compile a list of upgrades you’ve made to the home, including the dates and cost. This ensures your agent can present the most complete package of information to the appraiser.
  • Talk to your Realtor about any outstanding value to the property, and ask how they plan to communicate this value to the appraiser. It is after all the responsibility of the Realtor to know your property the best and clearly communicate any hidden value (such as niche location or features of its exceptional size) as they understand it, to the appraiser. Turner says, “On very large or expensive properties, a comparison [report] is very helpful.”
  • Work with your Realtor to get as many offers on your home as possible. Competing offers are often seen favorably with appraisers and can sometimes work to reassure them of a home’s value. Says Jonville, “ If I have mult offers I’ll tell the appraiser. That kind of gives a comfort level to the appraiser about the value. I can provide copies of contracts if they want to verify that.”

Once you’ve done all of this there really isn’t anything left for you to do, besides the obvious. An appraiser will ultimately assign the value they perceive, so prepare to be patient in the event that their value doesn’t match the deal you struck with your buyer. The official nature of home appraisals inherently means they complicate matters, but if you work with an experienced real estate agent who can accurately predict your home value from the outset, you’re far less likely to run into issues later on. Article Image Source: (Pexels/ Pixabay)