Appraisal

What is Appraisal?

It is the process through which the real estate appraiser determines the fair market value of a home. Thus, appraisal is an unbiased professional estimate of your home’s valuation and is used whenever a mortgage is involved during selling of your property.

Why do we need an Appraisal?

All lenders order an appraisal during the mortgage loan process so that the lenders have an unbiased information to assess the home’s true market value which will help them in assessing the appropriateness of the amount of money requested by the borrower. The appraisal can be based upon recent sales information of similar properties, the current condition of the property, the location of the property.

Who appraises your Home?

They are licensed or certified professionals, who are highly trained to determine the value of a property fairly, objectively, impartially and unbiasedly. Appraisers are heavily regulated and need to substantiate every finding and comment in the report that could influence the home’s value.

What are appraisers looking for in your home?

Anything that is permanently a part of or attached to the house. That will not evaluate anything that is not permanent your furnishings, décor, furniture or anything that’s not affixed to the property. Your appraiser will look at :

• Square Footage
• Number of bedrooms and bathrooms
• Code compliance
• Age of appliances, roof and vital systems
• Condition of flooring & fixtures
• Comparable listings
• Market Trends
• Location and view
• Lot size
• Curb appeal

How can I boost my home’s appraisal value?

• Water-stained walls, plaster cracks, soiled carpeting, pests or permanent odor might affect your appraisal. Patch the walls and do other touch up work.
• Fix leaky faucets, broken windows and cracked ceilings.
• Check your curb appeal . Take time out top clear and clean overgrown landscaping and broken garages.
• List down the repairs and improvements you might have done over years with their cost. Every little bit might help you.
• Display positive changes that might have taken place in your neighborhood.
• Age is just a number. The newer your home appears to be – regardless of the actual age – the better.

What if you are not happy with your appraisal?

If the buyer’s offer is higher than what property has been appraised for, then the lender is very unlikely to provide full loan amount. Since, the lender will have to consider the home’s appraisal as one of the main tools for determining the proposed loan amount, which might be lesser than the buyer’s offer amount. This doesn’t mean the deal has to fall through though.

What options can work for you?

• The buyer can make up for the difference between the approved loan amount and their offer out of their own pocket. With this, there’s no delay in getting to the closing table, and the sellers will receive their full market value. However, for lot of buyers it might mean a big hole in the pocket since purchasing a home typically means fronting a large down payment.
• If the buyers have an appraisal contingency for their offer, then they can retract from the offer. In this case, the seller would need to put the home back on the market, which means it’s again a start of the entire process for the seller.
• The seller’s and Buyer’s agents can re-negotiate the price and offer concessions to meet in the middle. This can prevent delays in selling the house and also help buyers to get the home they want.
• You may even challenge the report it is inaccurate after reviewing the Appraiser’s report and supporting documents. You can raise the issue if it has missed any important data about the property or comparable home. Most lenders review appraisals through a strict system comparing appraisal reports to other appraisals on all known sales in your neighborhood.

To read the story of one of my clients as to how I solved their lower appraisal click here.

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