Did you know that one of the biggest reasons that real estate transactions fail is because of a low appraisal? The buyer’s lender typically won’t issue a loan for more than the appraised value. So, when you sell your home, it’s critical you do everything you can to increase the appraised value as much as possible. But how exactly do you do that? And what exactly is a home appraisal anyway? Here’s everything you need to know about how to prepare for a home appraisal.
What is a Home Appraisal?
A home appraisal is when a professional, third-party appraiser goes through your home to assess its true market value. This is different from the home inspection in that an inspector is looking for structural issues and other potential problems on behalf of the buyer. But an appraisal is meant to ensure the lender’s loan is secured by the value of the property.
In other words, the buyer may have agreed to pay $200,000 for your home, but if the appraiser says it’s only worth $180,000, the bank won’t issue the mortgage and the deal might not go through.
When Does a Home Appraisal Happen?
In most cases, the home appraisal occurs after you’ve accepted an offer and the home inspection has been completed. Many lenders want the appraisal done within a week of the completed inspection. You’ll have to coordinate with the appraisal company and the timing is important because you’ll need time to properly prepare for the home appraisal.
Who Pays for the Cost of a Home Appraisal?
Typically, the bank or lending agency will hire the appraiser, and the buyer will pay the fee either upfront or as part of their closing costs. However, as the seller, you can also hire your own appraiser earlier in the home selling process to help ensure you’re setting a good price for your home. However, home appraisals don’t come cheap. The average home appraisal costs $300-$500.
Thankfully, Homes for Heroes is always out to save you money. If you work in one of our hero professions — firefighter, EMS, law enforcement, military, healthcare professionals and teachers — simply register with Homes for Heroes and you’ll be connected with a real estate specialist in your area. Your specialist will fight to get you the best possible price on your home sale and save you money in the process. Then check out the Homes for Heroes local deals to save on everything from appraisals to title fees. Heroes who use Homes for Heroes to sell a house save an average of $2,400.
Clean and Repair: Preparing for a Home Appraisal
To get the best possible appraisal value, you want to make sure your home is in tip-top shape. Ideally this would mean a complete kitchen remodel, finishing the basement and a whole host of other expensive renovations. But that’s not very realistic, and the return on investment may not live up to expectations. Instead of taking on a major project, there are a number of small things you can do to improve your appraisal value, including:
- Mow the lawn and trim any hedges or outdoor plants that need maintenance
- Sweep the sidewalk and front steps
- Wash the windows and replace broken screens
- Make sure doors open and close without sticking, and ensure all locks are working properly
- Clean and declutter each room
- Touch up any peeling paint and remove scuff marks from the walls
- Replace any burned-out light bulbs
- Repair broken appliances
- Make sure smoke and carbon monoxide detectors are working properly
- Fix any roof or gutter problems
- Make sure all heating, air conditioning, plumbing and electrical systems are in good working order
If you’re able, look at previous appraisals on your home and see what brought down the value of the property in the past. If you can address those issues specifically, you’ll have a better chance at a higher appraisal value.
How Do Appraisers Assess Home Value?
When working to determine the market value of your home, an appraiser will go through a number of steps. First, they will tour your home and look at every aspect of the interior and exterior to determine the overall condition of the home. They’ll take pictures and look at all major systems, accounting for any updates or outstanding issues that could either improve or lower the home’s value.
Next, they will look at comparable homes in the area and what their value is. This is similar to the market analysis your real estate agent conducted when trying to determine how to price your home. After they have completed their inspection and comparative analysis, the appraiser will issue a final report stating the true value of your home. This report will contain the results of their inspection, market analysis, photos and any information about the amenities, condition or location that impact the value of the home.
Can I Appeal an Appraisal?
If the appraised value of the home comes in below expected, or below the sale price you agreed upon with the buyer, there are several things you can do.
- You can appeal directly to the lender, which is often called a reconsideration of value. You’ll need to collect all relevant information that you believe proves your home is worth more and then make your case to the lender.
- You can order a second appraisal and pay for it yourself. This will likely require the buyer to find a different lender, and appraisals are expensive, so it’s generally not the preferred course of action.
- You can go back to the buyer and see if you can’t renegotiate to save the deal. The buyer can decide to change lenders in hopes that a second appraiser will judge your home more favorably, you can lower your asking price, or the buyer can try to come up with more money.
While all of these are essentially last-ditch efforts, if you’re determined to sell your home, it’s worth doing your due diligence. But the best way to ensure the deal goes through is to properly prepare for the home appraisal so you don’t run into issues in the first place.
Ready to get your home on the market so you can start getting offers? Register with Homes for Heroes and our dedicated real estate specialists will walk you through every step of the process, helping identify cheap and easy ways to increase the value of your home.