One thing everyone is interested in during a real estate transaction is price. Money makes the world go ‘round, as the old saying goes, and the amount you pay (or receive) as a buyer or seller is directly dependent upon the property’s appraised value. How do appraisers come up with their final numbers? What should every buyer and seller know about the appraisal process? Arm yourself with a few “insider facts” and you’ll be on your way to a smooth, understandable and fair home purchase or sale.
What it is and what it’s not
Keep in mind that a home appraisal is not an inspection. Appraisers are more interested in arriving at a numerical “fair value,” whereas inspectors are concerned with finding a structure’s physical flaws, and are less concerned about market value.
While the two disciplines have numerous overlapping skill sets, only an appraiser can determine an approximation of fair market value. An inspector, on the other hand, will determine what’s wrong, structurally, with a home.
Appraising takes many factors into account, like the value of nearby properties, how good the local school system is, whether there is public transit nearby, and dozens of other things a buyer might consider attractive.
If you know what a typical appraiser looks for, you’ll be in a better position to bargain, from the buyer side. If you’re a seller, knowing how appraisals work is hugely important. You can prepare your home with a few key things in mind to raise its appraisal value. That usually translates into more money for you!
What appraisers really look at
Most adults have sold a car or two in their lifetimes. If you have ever prepped a vehicle for sale, use that same philosophy to get your home ready for an appraisal. The main idea is that you don’t need tons of improvements and amenities, but want to make the best possible presentation of what you do have.
- Just as you’d do if you were selling a car, clean the property from top to bottom. No need for professionals at this point, just remove clutter and visible dirt. Trim the bushes, hose the exterior, clear out the gutters, mow the lawn, and basically do anything else that increases curb appeal.
- Make a list of minor repairs that need to be done and do them. You might need to call a plumber or painter at this stage, but most of the little things you’ll be able to do yourself.
- Speak with the appraiser and be ready to answer questions. Be frank and honest about anything that is in disrepair or needs attention. Also be sure to point out any improvements you’ve made to the home. Appraisers want to know about things that might, directly or indirectly, affect a home’s price, so be absolutely certain to mention everything you can think of, positive or negative.
- Finally, make the appraiser’s job easy by following along and being ready to answer their questions, but not asking too many of your own. Before they begin, point out where the restroom is, offer them a glass of water, and put dogs and cats out of the way. Think about how you’d like to be treated by a homeowner if you were an appraiser.
A home appraisal is one of the single most important pieces of data in the entire selling process, because it affects everything else. Knowing the ins and outs of appraisal will serve you well.