Selling a house may not be that easy, especially if it is going to be your first time doing it. Pricing the property correctly and getting a good home appraisal are vital steps in the process of home-selling. Hence, it is always recommended to come prepared. Essentially, appraisals have so much weight to carry and they normally determine the probability of closing a sale. Thus, making sure that you have properly priced your property is the key.
However, the National Association of Realtors says that problems that are related to home appraisals are one of the most common causes of late loan settlements. That is why it is recommended that you have a good understanding of an appraisal and why it is important to the process or mortgage as well as how it can affect your loan.
The Concept of a Home Appraisal
A home appraisal refers to the professional assessment so that homeowners would know how much the worth of their property is. Whether you are selling or buying a home, the process of appraisal is always implemented to find out the home’s sale price based on the fair market value.
The objective of a home appraisal is to obtain an approximate market value of the house while considering its market conditions and characteristics. Appraisers aim to identify the fair market value of the property that a commonly interested buyer can shell out for a home. Once the appraiser is done with the visual inspection, he generates a report explaining the factors that determined the value of the house along with its estimated market value. Although the worth of the house is ultimately based on the opinion and judgment of the appraiser, it guarantees unbiased and expert assessment.
A home appraisal assures the homebuyers that they are not paying more than the supposed worth of the home. Also, it gives the mortgage lenders cues so that they do not lend higher than the worth of the house. Considering that the home will serve as the collateral of the borrower, it is important to have a correct appraisal.
Appraisals are determined by several factors and some of these factors are uncontrollable. For instance, if your neighborhood has plenty of distracted home sales, it can affect other nearby properties and could reduce the home value. Generally, the size, age, location, and condition of the property, the amenities, necessary upgrades, and comps are the essential factors used by the appraiser to figure out the fair market value.
The Cost of Home Appraisal
For a medium-sized single-family home, you may need to secure around $300 to $450 for a professional home appraisal. Yes, it is the lender who requests the appraisal, however, the fee is normally shouldered by the borrower, except if there is a different arrangement implemented between the two parties. Usually, the fee is being included in the closing cost of the loan. However, if the house is very big and it features unusual traits, the cost of the appraisal can increase. For a multi-family home or big property, the fee for an appraisal could reach $600 or even more.
For smaller houses, it only takes around 15 to 30 minutes for the appraiser to complete his visit. Bigger houses, on the other hand, make take a few hours to complete the assessment. You should know that a home appraisal will commonly consume lesser time as compared to a home inspection since the latter involves an extensive check at the house. After the visit of the appraiser, it will take several days to finish the formal written report. However, if the assessment involves a complicated case, completing the report may take a few weeks.
Preparing for a Home Appraisal
There are several things you should do when selling a home to avoid a poor-value home appraisal:
- Get ready with your comps.
Make a list of properties that are similar to your property and hand it over to the appraiser. Researching online can help you generate the list or you can ask the help of a real estate agent.
- List down the improvements you have accomplished.
Highlight the repairs and renovations that you have done in the house by specifying the details. Attaching receipts and photos can be helpful. Repairs can certainly affect the results of the assessment. If the appraiser finds out that you have neglected your home, there is a good chance that they will decrease the value of your home believing that it didn’t have enough maintenance. Some appraisers may not even perform the appraisal unless you fix the obvious problems such as the faulty lock or broken window.
- Organize and declutter.
It can also help you increase the value of your home during appraisal if you spend time and effort making your property look at its finest. You can mow the lawn, clean the flower bed, or rake the leaves. See to it that your house is free from any dirt and mess and the excessive clutter is kept away.
What to do if you fail a Home Appraisal?
You can smoothly proceed to the next step if the home appraisal will match the offer of the buyer. However, what do you do if you end up having a lower appraisal? Well, you can consider several options:
- You can negotiate with your buyer and discuss how you can settle the difference.
Weighing the difference between the down payment and the closing cost, it may be possible that the buyer may not be able to manage the difference between the lender’s coverage in a mortgage and the offer price. With this scenario, you may have to lower your asking price so you can complement the appraisal or you can have an agreement to meet halfway. Ask the help of a real estate agent and let him help you negotiate with your buyer to measure how interested they are in the transaction.
However, if you are in a hurry of selling your property, you can suggest to shoulder some repairs or cover the closing costs. Nevertheless, you should not forget that if the sale was conditional on the appraisal complementing the offer value, your buyer gets the privilege of turning back from the contract without incurring penalties.
- Request a second appraisal.
A second appraisal may give you the hope of getting a better offer price. However, it may ask the buyer to find a different lender. As a seller who is trying to push for another appraisal, you will have to shoulder the appraisal fees. Just make sure that when you request for a second appraisal, you have already prepared your home and that includes getting all features in good condition. Conclusion Learning more about home appraisals can help you achieve a good fair market value. Before you decide to sell or buy a home, it is recommended that you learn at least the basics of appraisals. You should also know the tips on how you can prevent getting a low worth of property.
If you want to find help in the appraisal of your home, you can seek it from VIP Realty and they have the best realty agents who can assist you.