Let’s discuss a few tips buyers and sellers need to know regarding appraisals.
First, what is an appraisal? It’s an independent determination of the value of a home. Basically, an independent third party (the appraiser) will take a look at the home and all its features and compare it to similar homes that have recently sold. Whenever a home is purchased using a mortgage, the buyer’s lender will require an appraisal to ensure the amount of money they’re lending is in line with the home’s value. For example, if you’re purchasing a home for $700,000, the lender will need to make sure the home is actually worth that much.
If you’re a seller, what can you do to ensure that your home’s appraised value is as high as possible? First, work with your Realtor to put together a list of recent updates, repairs, and any changes you’ve made to the home that would boost its value. Basically, any upgrades you’ve made that would improve your home’s value over another home in the area are things you can point out to an appraiser that they might otherwise miss during a quick visit to the property.
Second, have your Realtor give the appraiser a list of recent comparable sales that were used to determine the home’s value. Additionally, if there’s any information available about pending sales that might indicate a rising market would be helpful.
Lastly, make sure your Realtor meets with the appraiser to help them understand the market value in the area. Things like the number of days on market, the number of offers received on your home, and any other contract prices that would support your home’s value can be super helpful to an appraiser in a rising seller’s market.
What should buyers keep in mind about appraisals? First, when you’re thinking about submitting an offer on a home, talk with your Realtor about price, market condition, and recent sales. You need to have a good understanding of what other homes have sold for in the area, whether they’re selling above, below, or at asking price, and what exactly those comparable sales look like.
In this market, it can be tough to get an offer accepted with an appraisal contingency. The reason why is that many other buyers choose to waive this contingency in a competitive situation. This means they agree to purchase the home no matter what the appraised value of the home comes in at. This is a great strategy if you have extra cash, flexibility within your loan terms, or feel strongly about the offer price you’ve submitted. Your Realtor can help talk you through this scenario and determine what makes the most sense.
If you’re thinking about selling your home and are curious about its value, give me a call. I’d love to browse through comparable sales and figure out what your home’s appraisal would look like. If you’re a buyer looking to better understand the market, reach out to me as well. I’d love to help you, and I look forward to hearing from you.