The Seven Key Points you Should Know about Home Appraisals
One of the most common mistakes many home sellers make, especially those
who are attempting to sell on their own, is to price their home either
above or below it's fair market value. This can be an extremely costly
mistake either way. If you happen to price your home below its market
value you run the risk of either selling it quickly for less than you
could have gotten for it or having buyers ignore it because they believe
the low price is an indication there's something wrong with it. On the
other hand, if you happen to price your home too high it could sit on
the market for months before it ever sells.
To avoid this problem many homeowners are opting to pay for a home appraisal
before they ever put their home on the market. Traditionally, home appraisals
have not occurred until a contract has already been made on the home and
the sale has been about to take place. In this way, lenders and buyers
could be assured they weren't paying too much for a home. Post contract
home appraisals are typically paid for by the buyer in their closing costs.
Today; however, sellers are more than willing to shell out the $300 or
so to ensure they price their homes accurately. In many cases this has
been due to a cooling down of the real estate market and a large influx
of inventory. Sellers who want to make sure their homes do not sit on
the market for longer than necessary see the cost as more than worth it
if they can sell their homes quicker and for more money.
Pre-contract Home Appraisals
In the past sellers have commonly relied on the advice of their real
estate agents regarding the price at which they should set their
property. The rising trend in pre-contract home appraisals does not
necessarily indicate a flaw in the advice of professional real estate
agents; however, independent unbiased appraisers are often able to
arrive at a price that is more in line with what the home buying public
is willing to pay for a particular property. In some cases, when a home
has been sitting on the market with no serious interest from buyers,
agents are even beginning to recommend their sellers invest in an
appraisal to find out whether the price is really right or not. These
home appraisals are helping home sellers be more competitive in a market that
is rapidly flooding with competition.
When an appraiser takes a look at a home he or she often notes items the
sellers and even the agent may be prone to overlook. Such items include
the visual location, proximity to important education, employment and
entertainment centers and even flaws in the structure itself. Ideally,
the appraiser looks at the home just as an interested buyer would and
appraises the home accordingly. The final appraisal report will also
take into consideration factors of the current local real estate market
that could affect the value of the home.
Beyond the fact that home appraisals can help home owners to set the right
price for their properties, they can also point out problems that could
be easily cured before the home is ever placed on the market. When
considering obtaining a pre-contract home appraisal there are seven important
facts you should know and be aware of. Taking the time to educate
yourself regarding home appraisals will help you to obtain a better, more
accurate appraisal and respond to it in such a way as to gain the most
1. Always find out exactly what the appraisal report will include
Remember, detail is important. The scope of the appraisal should include
specific details about the house as well as the neighborhood in which it
is located. In addition, comparisons should be made between your home
and similar homes that have sold within a close proximity recently. The
appraisal should also include information regarding the current local
real estate market as well as any problems that were noted in regards to
the home and how they might affect both the value of the home and how
long it will take to sell the property.
2. Find out how the appraiser intends to approach the appraisal
To some degree, home appraisals are always going to be subjective. That said;
however, a professional appraisal will also have enough information,
education, experience and research at their fingertips to develop an
accurate and sound appraisal.
3. Always make sure you know how to obtain a copy of your appraisal
Traditionally, home appraisals were
paid for by the buyer and were only available to the buyer and the
lender because they were funded by the buyer. If you're paying for a
pre-contract appraisal; however, the completed report should be made
available to you immediately.
4. When you receive the copy of the appraisal, take the time to really review
Avoid the temptation to skip to the bottom line and find out how
much the appraiser thinks your house is worth. While that is important
information it is also valuable to find out why the appraiser arrived at
that decision. It could well be that some minor imperfections and flaws
could be corrected before you ever place your home on the market that
would not only increase the value but decrease the amount of time the
home is on the market as well.
5. Find out the certifications and education of your appraiser
In some states there are few requirements for an individual to become a home appraiser. Don't just
hire anyone. Remember the value of your home is riding on the experience
of your appraiser.
6. Find out how many home appraisals the appraiser has performed
It won't matter in the least if the appraiser has been in the business for
twenty years if they have performed less appraisals than someone who has
only been in the business for two years.
7. Don't put off getting an appraisal
You can typically expect a professional appraisal to cost around $300 or $400 and while that may
seem like a large chunk of change to lay out at the moment, in reality
it could put several thousand dollars back into your pocket when you do
sell your home.