An appraisal is an unbiased, professional estimate of the value of a property. It is required by the lender before issuing a mortgage, and usually happens after an offer has been made and the home has been inspected.
Appraising a property isn’t an exact science. It is only an opinion of what your home is worth. It doesn’t dictate how much the buyer should pay, or how much you should accept. If your home is appraised lower than the price you and the buyer agreed upon, the lender isn’t going to make up the difference. It’ll be up to you and the buyer to figure out who pays for the shortfall. Both of you can agree to negotiate a new price, or you might consider finding someone willing to offer cash, which doesn’t require an appraisal.
Preparing For The Appraisal
- Comparable listings
The first thing a home appraiser does is pull comparable listings (called “comps”) from the nearby area. These are similar properties, usually located within a mile or so, which have sold in the last 90 days. Typically, an appraiser compares the target property with at least three comparable ones. While appraisers have full access to MLS Listings and other programs, some offerings might not appear, so it’s good practice to compile your own and have a printed copy ready to hand to the appraiser as a courtesy. If you are a client of ours, then Julie and her team will already have comps prepared that you can review and share if possible. Click here for resources.
- List of improvements
Make an itemized list of all significant repairs, updates, and improvements you’ve made to your home, including dates and total cost. Major structural upgrades, such as replacement of a worn roof or stabilization of a crumbling foundation, are important to an appraisal because, if they are not done, the home’s value suffers. Do not include cosmetic upgrades. Any improvements that are not permanent are usually inconsequential to a home appraisal.
- Neighborhood bragging rights
If there have been positive changes to your neighborhood, let the appraiser know.
For example, did a new Starbucks open nearby? Mention it to the appraiser. After all, there was a recent Harvard Business School study that determined the entry of a Starbucks into a ZIP code is associated with a 0.5% increase in housing prices within a year.
What about public schools? How are they ranked? (Check here.) What’s the availability of daycare centers in your area? (Click here.) Mention improvements in public transportation, availability of bike paths, access to nature and hiking trails, etc. Display your neighborhood pride!
- Deep cleaning
“The home appraiser isn’t coming by to judge the cleanliness of your homestead,” says appraiser Adam Wiener, the founder of Aladdin Appraisal in Auburndale, MA. “But it’s still good form to declutter, dust, and mop beforehand to show your home in its best light. Home appraisals won’t typically devalue your home because it’s messy—but a neat, organized home might help you. Even if they’re not consciously aware of it, the appraiser might value a messy home a little lower.”
So, the cleaner you can make your home look before an appraisal, the better!
The Physical Appraisal
Imagine your home after you’ve emptied it of your personal items. That’s what the appraiser will focus on. He will assess and record the quality and condition of the “bones” of your home and combine it with the comps to determine the market price of your property.
While unbiased, the appraiser is human, so will likely be influenced by first impressions. Make sure you’ve done everything you can to enhance your property’s curb appeal.
Once inside, the appraiser will conduct a room-by-room assessment to look at the material, quality, and condition of all fixtures, appliances, flooring, plumbing, and anything that will be left behind when you move out, including:
- Plumbing fixtures (toilets, showers/tubs, faucets)
- Interior paint quality
- Flooring
- Appliances
- Windows/doors
- Furnace
- Air conditioning unit
- Lighting fixtures
- Cabinetry
- Countertops
- Electrical
- Basement finish
- Security system
- Fireplaces
Appraisers often value houses in $500 increments, so if there’s a repair over $500 that can or should be made, do it. Fix leaky faucets, running toilets, broken windows, and cracked ceilings. Be sure to also touch-up the interior paint.
Once your home is appraised, it is almost impossible to have the appraiser reconsider his assessment. That’s why it’s crucial for you to present your home in the best light possible and be fully prepared for when the appraiser knocks on your door.
