I recently attended a panel discussion on real estate appraisals and wanted to share some interesting facts and, hopefully, some information that can help this final hurdle of a home sale feel less arduous. In a nutshell, appraisals are important because they can adversely affect the buyer’s ability to obtain a mortgage. No matter how great their credit score, a bank isn’t going to approve a mortgage application if your buyer is trying to borrow more money than your home is worth. An appraisal is not the same thing as a home inspection, but it is every bit as important. In fact, the Williamson County Association of Realtors thinks that sellers should consider an appraiser to be their “final buyer.” If you went all out to get your home market ready, don’t sit back on your laurels with an approved offer. Until that appraisal is back with a value that matches your buyer’s mortgage request, you’re not ready to close.
If you followed my blog this summer, you might have read my “big three” ideas to improve the value of your home before listing it for sale. These same ideas are just as important for getting a favorable appraisal. Home maintenance makes a big difference on an appraisal and there’s no better way to help improve the overall impression of your home than making sure that the interior is freshly painted with clean, crisp, neutral colors. Curb appeal also makes a big difference. Landscaping that is maintained and fresh is crucial. Front doors and porches should be neat and clean. Kitchen updates, including hardware updates and granite installations, make the biggest impact on a positive appraisal.
It is helpful to provide a full property disclosure as the appraiser will want to know the age of mechanicals. They don’t necessarily need to know the age of each item, but they do look at the overall package and what costs a buyer might soon incur. They also need to know the level of updates, whether plumbing has been replaced, cabinets have been refaced, etc… If you’ve remodeled any part of your home, they’ll need to know if a permit was pulled and when the renovation was completed. While appraisers can get this information on their own, it’s in your best interest to make their job as easy as possible and have these details well organized and available.
On the day of your appraisal, make sure that the appraiser has FULL access to your home and all areas of the home. All utilities must be turned on. Appraisers must get head and shoulders into any crawl spaces and scuttle holes for FHA appraisals, so having those areas cleared is helpful.
After putting your home’s best foot forward, know that the appraiser will consider the following things: lot size, building size, value of each individual component as if they are separate, the number of bathrooms, number of bedrooms, number of garages and overall condition of the home. Values will vary from neighborhood to neighborhood. The appraiser will take photographs of every room in the home and in some cases will arrange for aerial shots of the property. These photos are incredibly important as the underwriter of the loan will never go to your house. The underwriter has the final say on the appraisal of your home and a buyer’s mortgage application, so it is imperative that an independent appraiser provide the best information about your home.
It is fine for a seller or Realtor to speak to an appraiser, but by federal law, appraisers must maintain their independence. They cannot be influenced by Realtors, lenders or sellers. When providing information to an appraiser, remember that what you don’t provide might be more telling than what you do. If you provide outdated comps or comps outside of the area, it might indicate a problem you are trying to hide. For a complete list of information that appraisers must provide a lending institution, follow the “appraiser” link on www.efanniemae.com
ABC News recently aired a story about the appraisal process. If you’d like to watch, click here. A good Realtor will work with you to help pull out all the stops so that when your “final buyer” comes for their visit, the appraisal process will goes smoothly and yield a favorable appraisal of your home.