What Does a Home Appraisal Consist of When Selling a House?

What Does a Home Appraisal Consist of When Selling a House

Home appraisals are an expert’s view of your home’s value based on present market conditions.

It comprises two main data sets to establish an accurate price for the property: a walkthrough of your home and an analysis of comparable houses in the neighborhood (called”comps”). The actual inspection can last anywhere from fifteen minutes to many hours, based on the dimension and complexity of your property. Complete the entire appraisal within a few days or some weeks.

Walkthrough inspection

Appraisers begin by examining the property to gain an understanding of it. They should determine the design of the house and assess its overall condition. Special attention is given to safety issues or major items such as building foundations, roofing, and HVAC systems (heating, ventilation, and cooling).

“I’m determining what upgrades they have, what the condition of the house is, and what the quality of the construction is,” said Steven Crane, a state-licensed real estate appraiser with over 20 years’ worth of expertise in Arizona.

Appraiser research

Specific facts must be discovered to arrive at an educated and accurate valuation of the home you own.

Appraisers start by identifying comparable homes similar to yours that recently sold in your region to get an idea of how much buyers have paid for similar homes.

A good alternative is an identical-sized house in your area that was closed in the past few months and has most, if not all, of the same amenities as your house.

Utilizing the comps that are available appraisers may alter their appraisal of your house by putting dollar values on specific features that don’t meet, then they add or subtract them from the overall value. For instance, the case where a property in the comp includes a fireplace but your house doesn’t, the appraiser could take the cost average for a fireplace out of the value of your home.

Certain appraisers also consider market trends to make their estimates as accurate as possible. The sale time adjustment is based on the time since a good comp was sold and considers the increase or decrease in the housing market over the last two months. If a comparable was sold just two months ago, and the prices of homes in the area have been up by 12% in the past year, an appraiser could add around 2.2% to the appraised value to reflect the change in the market.

What do home appraisers look for when they visit my house?

Certified appraisers typically utilize a Uniform Appraisal Report to determine a house’s value.

The appraisal report instructs the appraiser to evaluate the condition and quality of the house’s interior and exterior. This includes things like the foundation, roof, walls, drainage of water from the building, type of window, and flooring.

They’re also examining facilities (e.g., fireplace, pool, deck/patio, fence) and appliances (e.g., refrigerator, range, oven, dishwasher), along with any health or safety issues, such as signs of dampness or infestation.

“We need to inspect water heaters,” Crane stated. “Water heaters are not necessarily safe if they fail because you have high-pressure hot water that can potentially cause damage to another human being.”

Other aspects that appraisers consider in determining the value of a house are:

  • The location of your home
  • Market conditions
  • The size of your house (square footage)
  • The number of bedrooms and bathrooms
  • The age of your home
  • Renovations and upgrades
  • The size and the features of your property’s overall design
  • Neighborhood characteristics

What hurts a home appraisal?

  • The housing market and the current trends in housing
  • Undesirable location
  • Construction that is not of high quality
  • There aren’t many beds or baths
  • Poor curb appeal
  • Evidence of neglect or delayed maintenance
  • The lack of facilities
  • Broken or out-of-date appliances
  • Outdated home systems (alarms, HVAC, septic, etc.)
  • Damage or infestations caused by pests
  • Foundation or structural problems
  • Comps that are not of high quality or have a low number of competitors

How should I prepare for a home appraisal?

Preparing for an appraisal of your home is similar to preparing for potential buyers’ visits. The major difference is that appraisers won’t look at your decor or furniture.

“Don’t fear about your personal property,” Crane stated. “Look at health and safety items.”

If exposed wiring is present, cover it. If your porch doesn’t have a handrail, install one. Check to see if your smoke detectors are functioning. Make sure your water heater is set up correctly. Make sure your garage door closes.

“Don’t try to hide anything because we’re going to look behind every door and into every space,” Crane declared. “You’ll also want to have an explanation for any evident damage to your home.”

It’s also crucial to inform appraisers about any improvements you’ve made to your property in the past. This can be accomplished by notifying the appraiser in person or providing a flurry of details at the time he visits.

“If [the homeowner] has done a bunch of updates, either I type it out, or they’ve left things on the counter showing what all’s been done,” said Linda Williams, a top-selling real estate agent in Fort Wayne, Indiana, who sells houses 50 percent faster than other realtors in her region. “Like, ‘We’ve just had new granite countertops put in this year,’ or ‘The bathrooms have been remodeled,’ or ‘The kitchen has been updated.'”

Other things to consider before the visit are:

  • Make sure the house is tidy both inside and outside
  • Be sure that your home is easily accessible
  • Be sure to protect your pet
  • Conduct your research on comps and provide the details to the appraiser.

Should I be present for the home appraisal?

Although not necessary, staying at home during the appraisal may be beneficial.

The appraiser might need your benefit in gaining access to specific areas of your house or may have concerns regarding the property, for instance the presence of significant improvements made in the past which aren’t apparent (i.e. the installation of a new HVAC or septic tank).

One thing to be aware of but not to follow the appraiser or distract them by talking to them.

Crane explained, “[Homeowners] can actually diminish the quality of the appraisal if they try to engage you during the inspection.”

If a resident is in the area and is interested in chatting, Crane will usually request to talk with them after he’s finished photographing and looking around.

“That’s when they can describe to me what they feel is important to know about their house,” the man said.

Who pays for the home appraisal?

When a buyer requests a loan, the mortgage lender must arrange to have an appraisal done through an appraisal management firm (AMC). Ordering an appraisal through an intermediary like this guarantees that the appraiser assigned is independent of the lender, borrower, and seller.

While the lender files the request through the AMC, the request is usually the obligation of the individual who is borrowing money (or refinancing) to pay the appraisal fee.

Does a messy house affect an appraisal?

From a strictly competent perspective, a messy home does not impact the appraisal. What appraisers pay attention to is the condition and quality of the “bones” of your home.

“If it’s generally cluttered, that doesn’t make any difference,” Crane explained. “But if someone has obviously neglected the house and there’s a significant amount of deferred maintenance, that would affect the condition rating and the value.”

Appraisers are people, but going through a house that’s not in order could impact the the appraiser’s perception of the property’s condition. This could prompt them to ask questions adequate to Williams.

“So I usually just say keep it show-ready when the appraiser comes,” Williams stated.

What should I not say to the home appraiser?

It’s acceptable to share information about your house and neighborhood, but it’s not an ideal idea to discuss the value of your home with an appraiser. An appraiser’s job is to act as an impartial appraiser of real estate.

If a homeowner is trying to find out the amount that an appraiser believes the house is worth in the walkthrough or insists on the appraiser to do so in any way to get an exact value or figure, it could cause a bad taste to the appraisal’s mouth.

“They already know they have the pressure from the agents wanting to get through the appraisal stage, so they don’t need extra pressure from anyone else,” Williams explained.

This is particularly true when the appraiser believes that the agent who listed the property told the homeowner to exert pressure. Real property professionals are legally prohibited from influencing the appraisal’s outcome. Playing with this delicate balance may cause interference with the appraisal procedure.

Is a home appraisal required?

A home appraisal is needed if buyers are with some type of loan aid.

The lenders want to be sure that the home being purchased is, in fact, worth at least the amount being taken from the purchaser.

This is a way to protect yourself should the buyer fail to pay their mortgage and the lender have to take over the property.

If it’s a cash purchase, it is the buyer’s decision whether or not to have the property appraised prior to closing.

What if my appraisal comes in low?

If the appraised price is less than the amount agreed upon in the purchase contract, the typical scenario can be one of the following: The buyer can come up with additional cash; the seller decreases the price, they reach a compromise, or they end the contract.

In some cases, lenders may allow buyers to request another appraisal, according to Williams.

“Some lenders will allow it, and some will not,” she added. “The only caveat is that if it comes in lower, you’re in a worse position.”

Based on data from the consumer-reporting agency CoreLogic, in a balanced market, it’s normal for an average of 7 to 11 percent of home sales to have appraisals within the range of the contract value.

Should I consider a pre-listing appraisal?

Answering this query depends on the situation and the person you inquire with.

“I don’t usually recommend [my clients] getting an appraisal before we go to market just because every appraiser is different, and sometimes by the time you go under contract, things have changed in the market, so it’s going to affect the appraisal anyways,” Williams stated.

A pre-listing appraisal may be more useful if your property is distinctive or located in a rural location with few comparables.

“It would benefit [homesellers] out because an appraiser is probably going to highlight those health and safety items, and then they’re going to get a pretty good opinion of the value,” Crane explained.

What’s the difference between a home inspection and a home appraisal?

A home appraisal or inspection are two separate real estate transactions required when you purchase or sell your home.

The appraisal focuses primarily on the value, or what your home is worth while a home inspection can examine the structural integrity and safety of a home.

The only time the lines can blur is when appraisers notice a safety or health concern through what Crane describes as “casual observation.”

“If I can see it by casual observation, then I’ll note it in my report,” he added.

Crane does not always have the experience to determine the risk of something being dangerous, and in that situation, he’ll advise a competent examiner of the issue.

Get the most out of your home appraisal

A clear understanding of the appraisal process can significantly impact how smoothly your appraisal of your home is completed.

Keep in mind that all appraisals comprise an inspection and an examination of comparables. Both play an important role in appraising your home, and it is essential not to ignore either. If you’re not rushing to sell your house, you might want to consider timing your sale after a couple of similar properties in your area have been sold. This will warrant the appraisal, which will be backed by sufficient evidence to justify the accuracy of the valuation.

An experienced professional in real estate can benefit from this kind of strategy by monitoring the local market and alerting you to which irons are on the boil. Realpro nj platform can connect you with top-performing agents. This free tool reviews more than 27 million transactions and thousands of reviews. It only takes two minutes to match you with the best agents in your region.

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