How Home Appraisal Works
Selling a home can be tough work. Not to mention finding an interested buyer that would actually purchase the property. But before closing the transaction, there’s one hurdle you have to complete: the home appraisal. Getting an appraisal (and home inspection) is a serious milestone that can be exhausting if you’re not well prepared for what you’re doing next. Many sellers today don’t know how to prepare for a home appraisal. In layman’s term, a home appraisal is a professional opinion of your home’s market value that gives a clearer picture to the real estate buyers and lenders.
In the overall process, there are three steps to expect during your home appraisal.
The real estate property inspection.
1.The first step is inspecting the interior and exterior features of your home—examining the property’s whole condition. The appraiser usually checks if there are visible defects and minor repairs that needed to be done.
Comparing recently sold homes.
2. After performing a home inspection, the appraiser then researches and evaluates recently sold properties near your area. And then continuing with an analysis to carefully calculate the home’s value based on the current market value.
The Final Evaluation or Report.
3. For the final process, the appraiser prepares the whole property and market analysis of the property. Usually, the official report includes details like the home’s condition and size, photos or sketches of the property, any known record of structural issues, and also notes on recent home repairs or renovations.
What is Home Appraisal?
In home-selling, a home appraisal is an unbiased evaluation or report of your property’s current value in the market. A certified state-licensed professional appraiser is going to evaluate your home and give its total worth. Usually, this is objectively evaluated through different factors including the property’s features, condition, location, current market trends, and specifically in comparison with the other sold properties near your area. It’s also possible that the home-selling transaction can be canceled or delayed when the appraisal value is lower than the expected value.
Although there are aspects you can’t change—i.e. your location and the value of your neighborhood homes—there are a few simple yet impactful steps you can follow.
Pro Tips for Preparing for an Appraisal
Deep clean your home before appraising
Never show your home to the appraiser when you haven’t cleaned every nook and cranny. Make sure you do a deep clean first—vacuum hard-to-reach ledges, windows, and even above cabinets. Wipe off cobwebs and bugs, especially from your window screens. Don’t only deep clean your living room, including the bathroom and kitchen. Give extra attention to those often-neglected spots in your home. Wipe clean all table surfaces, appliances, chairs, dressers, sink basins, countertops, and windows. Don’t forget to wipe clean the stains on your carpet and upholstery, and smudges and fingerprints on the doors and doorframes.
Make sure everything else is functional
A burned-out light bulb, defective smoke alarm, or broken light switches can cause an under-appraisal on your home. Inspect if everything on your property is working properly. You can make a list of minor upgrades or repairs to show that your home is well-maintained and is worth more than the estimated price.
Although an appraiser won’t examine your home thoroughly as most of the home inspectors do, it’s still best to show your home in its best shape, including most of the major systems. There’s a big chance an appraiser can lower your property’s value after having examined several of your home devices and systems are in disrepair.
Research and evaluate the numbers beforehand
Nothing beats preparation and information. Contact your real estate agent and ask for details on the recent closing home sale prices in your neighborhood. Through looking at the numbers and information, you have now a good idea of how your property measures up to the market.
These are helpful insights that are compared to your home’s market value to similar properties sold in your area. If you’re targeting for a higher price same with the recently sold homes (but they have much modern look and appealing features), then you better make some home improvements to catch up with the deal.
Create a list of home upgrades and repairs
Show a list of repairs and upgrades to the appraiser. It will help them to see what you’ve done so far and how you made an extra effort to add quality of your property’s condition. To increase the value of your home, try to list for usual repairs such as leaky roof, leaky faucets, rain gutters, defective doorbell, loose floorboards, or upgrades in the fireplaces, pools, etc.
It’s a better idea to point out upgraded features that could potentially add to the appraiser’s final opinion of the home’s value. Remember, it’s a different approach when you want to impress your appraiser—buyers tend to appeal on subjective considerations, but appraise dive more on objective factors.
Apply the $500 rule
Have you ever heard of the $500 rule? It’s a useful idea that suggests every house issue can add up when it is multiplied by $500—and so that’s why it’s crucial to perform minor repairs rather than ignoring them. Minor issues like faulty light switches, defective doorknobs, and such can affect the whole worth of your home. Don’t let a simple issue can decrease the value of your home. As much as possible, repair what is to be repaired even how slight it can be.
Apply the $500 rule seriously and think of it as a good tactic to increase the value of your home. Spending an amount of $500 or less to do some repairs and fixes can save you more than you imagined. Don’t risk showing your home to the appraisal having lots of repairs to be done.
What do appraisers usually look for in a property?
The steps on how to prepare for an appraisal are going to be exhausting. But it’s doable and certainly easy when you have an idea of what the appraiser is going to be cautious of. Most certainly, appraisers notice more about the:
- Recent home improvements and upgrades you’ve done (condition of home systems)
- Exterior features of your property (amenities like garage, porches, and decks)
- Interior features of your property (and also the total room count)
- The proximity of your house lot location (to the school district, neighborhood appeal, and others)
- Overall property’s size or structure (or quality of the build)
- Type of home: modular construction or stick built
- Other factors worth mentioning that could affect the property
Mentioned above are the most crucial factors that can have a big impact on your property’s value. So, take extra attention to these features and elements that appraisers will be appraising. On the other hand, there are also things around your home that could influence the value of your home, such as proximity to a gun range, train tracks, noise pollution, several foreclosures, etc. to name a few.
The Bottom Line
Learning about preparing for an appraisal process and how it really operates can get the highest possible value to your home. Or if you’re serious about getting to refinance the mortgage on your home, you’ll make sure your home is appealing inside and out. According to The Appraisal Institute, maintaining your home’s landscape can enhance your property’s final value. After all, how your home looks can definitely affect the appraiser’s decision. Prepare a strong data and list of upgrades can definitely impress your appraiser.
Spend time and money on things that are broken not on things that are still working. The buyer has already chosen to purchase your home, so any upgrades you’ve made are just ways to boost up the market value. If such a case when the appraisal comes low and the deal gets canceled, then it’s time to think of doing some extra upgrades or add unique assets to make your home more extra special.
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