Home appraisals are meant to establish market value. A lowball appraisal can kill your real estate transaction.
A Home Appraiser is a specialist who uses mathematical analysis to determine your home’s value (Sales Comparison Approach). This value is based on similar homes in your neighborhood.
First, the value per square foot is determined and applied. Then the appraiser looks at the overall condition of the home.
1. All appraisers are not created equal
Appraisals are not fact. Rather, they are the opinion of value of the appraiser that completed the appraisal. And this opinion is only as good as the knowledge & competence of that appraiser. You’d think that they would all have similar knowledge and access to the sales data used to determine the value. This is not the case. Many appraisers are coming from out of the area to complete appraisals in Big Bear and they are only working with 50% of the data.
There have been a lot of changes in the appraisal industry over the past 3 years. In short, many inexperienced, unqualified , and geographically incompetent appraisers are out there doing the majority of appraisals these days. This only raises the odds that you will be dealing with an appraisal issue in your next real estate transaction.
2. Cosmetic Improvements
Your home does not need to be perfect. You will want to remove any eyesores. Mow, trim and get rid of weeds. We suggest you also remove carpet stains, marks on walls and un-clutter the kitchen. Make sure you’ve fixed leaky faucets, cracked windows and any structural damage. “Condition, condition, condition!”
If you plan on spending money, prioritize and make sure there is a return on your investment. Popular improvements include plumbing and light fixtures, carpeting and paint.
3. Make a list of capital improvements
What distinguishes your home from others? Is there a finished basement or an extra half bath? You’ll want to provide your appraiser with an itemized document of upgrades and associated costs. Improvements can include things like a new roof, insulation, and air conditioning. Do not put regular maintenance items, like painting, on this list.
4. You can challenge the appraisal
Given today’s market conditions, your home may not be worth what you think it is. According to the Los Angeles Times, “More lenders are using automated valuations, particularly in the home-equity sector, to speed up the process and cut costs. But they are notoriously inaccurate.” Some appraisers never leave their car.
You have a right to request a copy of the report. Check through it carefully for errors in dimension, or ignoring upgrades. You can politely suggest to the lender that the appraiser assigned to your home erred, and request a second look.
Remember, appraising homes is an art, not a science! However, it is much easier to work with the appraiser up front, by meeting with him, providing him comparables and other details prior to him putting the appraisal together.
More About Real Estate Appraisals;
- Overcoming challenges of borrower-ordered appraisals | Cross … – This was the major purpose of the Home Valuation Code of Conduct (HVCC), which became effective May 1, 2009, and which has substantially changed the appraisal landscape. Assuring appraisal independence: The crux of …
- Avoid a Low Home Appraisal | Buying or selling a Home … – Even if the buyer is willing to pay a certain price for a home they usually need a mortgage. That means it is actually the bank who is buying the home. The bank wants to protect their investment so they do an appraisal.
- Evaluating the Assessed Value of Your Home or Business Property … – Find similar homes in your neighborhood and look up the assessed values for the homes on your appraisal district’s website. This will let you know if your home’s value is unequal compared with other similar properties.