An appraisal is required by the buyer’s mortgage lender who is placing a mortgage, deed of trust or some other form of lien on the home for repayment of the loan.
The Real Estate Appraisal for Sellers
Once a home is listed for sale and under contract or “pending” the real estate appraisal for sellers will come next unless it was a cash sale. An appraisal is required by the buyer’s mortgage lender who is placing a mortgage, deed of trust or some other form of lien on the home for repayment of the loan. There are some things you need to know before the appraiser visits your home and here are some time-tested tips that will help you.
Pricing Your Home Correclty
In my career I have often seen appraisals come in below the contract price the seller and buyer agreed to because the appraiser could not support the value the buyer agreed to pay. I have heard many times in my career sellers say to an agent, “I have to have net a certain amount of money to pay off some bills and buy another home” and unfortunately the inexperienced agent lists the home at too high of a price in a desire to appease the seller and the home never sells.
Please note that even though your agent may find a buyer ready, willing and able to pay the asking price your home was listed for this does not determine market value for your home. Homes are valued by what comparable homes in the area sold and closed for in the previous 6 months. The appraisers make adjustments for differences in location, condition, floor plan, etc. They then determine a value based on their final adjustments. It does not matter what you and your buyer think your home is worth. What matters is what the appraiser determines the current market value to be.
Two years ago a seller contacted me and was frustrated that her home had been on the market for 90+ days and not even an offer had been submitted in a good seller’s market. After some investigation on my part I concluded the listing agent had listed the home at the price the seller told her she needed and wanted. I also concluded the home was priced $17,000 above market value. After proving the actual market value to the seller she then fired her agent and hired me to list her home at the price I recommended. We received an accepted offer in less than a week and the sale closed 30 days later.
Preparing the Interior of Your Home
When a real estate appraiser views the interior of your home he/she looks at the overall condition of your home and the flow and feel of your home. Here are some key things for you to remember.
1) Make sure your home has a pleasant odor. No cigarette smoke or other foul odors
2) Make sure there are no torn carpets or linoleum that are considered a hazard
3) Turn on all lights and open up all curtains and drapes to let natural light in
4) Make sure your home is not cluttered and hard to navigate through
5) The access to the attic and crawl area (if it has one) must not be blocked and easy to access
Preparing the Exterior of Your Home
The exterior of Your Home is also very important and again, here are some tips that will avoid any unwanted surprises:
1) There should be no bare and unpainted wood on the body, trim or fascia. This is unacceptable by lenders
2) Make sure all screens are in good repair and not torn
3) Most appraisers require that a roof have a 2 year remaining life per a certified roofer
4) Make sure all fences are in good repair and painted or stained
5) Mow your lawn and if its winter trim and clean up any dried plants and shrubs
The overall condition of your home is very important and here is a fact many sellers do not know. If your home was built say in 1969 but has been updated with newer windows, roof, kitchen and floor coverings the appraiser may say the “Effective Age” of your home may be 1985 due to all of the upgrades. The appraiser will then give your home additional value for those upgrades.
This is a very good reason to “Prepare your home to sell” years in advance by keeping your home in excellent condition over the years. I tell many of my clients to each year plan on doing some kind of improvement to their homes. Paint the interior one year, the exterior another year, replace floor coverings in 5-6 years and save for a new roof when the time comes. Incorporate the art of Feng Shui and combined this will all make the selling of your home much easier and you will also reap the highest price possible when it comes to selling. Many sellers I have worked with in the past have done nothing to their homes since they purchased them and ended up accepting a much lower offer than they could of if they had kept their home in good condition.