Understanding Home Appraisals: What Sellers Need to Know and How to Influence the Outcome
A home appraisal is an important part of selling a house because it helps provide a fair estimate of how much it is worth and can help you when pricing your home. Many factors can impact the appraised value of a property, but sellers can also take steps to influence the outcome and get a fair price. Whether you're a first-time seller or a seasoned pro, understanding the ins and outs of home appraisals and how to influence them can help make sure you get the most out of your next home sale.
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What Is a Home Appraisal?
A home appraisal is a formal assessment of the value of a house. Appraisals are conducted by licensed professionals who have been trained to impartially determine property value. The purpose of an appraisal is to ensure that buyers know exactly how much the home is worth and to help lenders determine whether or not they should finance the purchase.
The process starts with an inspection, during which the appraiser looks at the property in person and makes notes about any changes or improvements that might affect its value or ability to sell. They then compare it to similar homes in the area, which helps them come up with a range for the home's valuation. Finally, after completing their research and analysis, they provide an estimate of what they believe the house is worth in the current market.
Home Appraisal vs. Home Inspection
One of the primary differences between a home appraisal and a home inspection is that an appraiser provides an opinion on the value of a property, while an inspector looks at its condition. Both processes must be completed prior to closing on any real estate transaction, but the appraisal is required by lenders for mortgage approvals. Basically, the appraisal assesses the market price based on comparable homes in the area, while the inspection is critical before buying because it examines safety, structural integrity, and the functionality of major systems.
How Is Your Home Appraised?
A professional appraiser's work begins long before they step foot inside your home. They research comparable homes in the area and determine market trends based on recent sales. Once at the site, they make note of details such as square footage, number of bedrooms and bathrooms, condition of kitchen appliances and plumbing fixtures, age and type of construction materials used, landscaping features, neighborhood amenities, and more. This data is then combined with comparable homes to come up with an accurate market value for the home.
Additionally, if requested, an appraiser can also provide an estimate of future values depending on economic conditions. In short, when figuring out how much a house is worth, appraisers look at both its internal features, like its location, size, and condition, and external factors, like the state of the market. In doing so, they are able to provide the most accurate valuation.
How Can You Influence Your Appraisal?
There are several ways you can increase the appraised value of your home to help you get the best sale price, including:
Make Minor Repairs and Improvements
Small cosmetic repairs and upgrades, such as fresh paint, updated fixtures, and landscaping, can improve your home's appearance and increase its value. With a few common tools every homeowner needs in their tool box, you can even make many of these repairs on your own without breaking the bank on hiring a repairman.
Keep Your Home Clean and Clutter-Free
Although it isn't a direct factor in your home's worth, you want to demonstrate that you've been a responsible homeowner, so a clean and tidy home can still make a difference in your appraisal value. Make sure your home is free of clutter and well-organized so it's easier for the appraiser to see the true value of your home and notice any unique features.
Make Energy-Efficient Upgrades
Energy-efficient upgrades, such as new windows or replacing insulation, can increase the value of your home. These updates lower energy bills and are desirable features for home buyers.
Showcase Your Home's Best Features
If your home has unique features like a fireplace, hardwood floors, or a large backyard, make sure to showcase them during your appraisal by having them look their best. Anything that sets your home apart from comparable listings can help increase the perceived value.
Provide Documentation Around Recent Improvements or Upgrades
If you have made any significant updates, such as a new roof, HVAC system, or renovations to your kitchen, it can help to provide documentation to the appraiser. These upgrades and repairs can help them understand the true value of your property and demonstrate your past responsibility as a homeowner.
How to Challenge a Home Appraisal Report
In some cases, a homeowner may not agree with the appraiser's findings. The appraisal report might contain errors that the homeowner believes have caused an inaccurate home valuation. In such situations, it is possible for a homeowner to contest a bad appraisal report.
The first step in challenging an appraisal report is to document any discrepancies between what was reported and the actual condition of the home at the time of the appraisal. This is usually done by comparing photos taken before and after the inspection, as well as by providing evidence from inspections done by contractors or independent assessors. It can also be helpful to note any differences between what was stated in the listing description and what was observed at the time of inspection.
Once all discrepancies have been documented, they should be presented to the appraiser in writing. If necessary, further discussions can take place with the appraiser until an agreement has been reached. Ultimately, this process can provide homeowners with an opportunity to ensure that their home's true value is accurately reflected in its appraisal report.
Understanding Appraisals Can Help You Get the Most from Your Home Sale
Appraisals are an essential part of the real estate process. By taking steps like making minor repairs and improvements, keeping your home clean and clutter-free, making energy-efficient upgrades, showcasing unique features, and providing a list of recent upgrades and improvements, you can increase your home's appraised value. Take control of your appraisal by following these tips and getting a fair price for your property.
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