Selling Your Home? Make Sure It Appraises For Maximum Value

There are two phases of the home selling process that throw most homeowners for a loop: The home inspection and the appraisal. Both can have a major impact on the home’s market value and, thus, how much money can be realized from the sale.

Repairs suggested on the home inspection report can be negotiated between the buyer and seller.

While both can break the sale, the appraised value isn’t something you can negotiate. This is why it’s so important to work with a real estate agent to determine the current market value of your home. Then, do everything you can to ensure that the appraiser agrees with that value.

What Influences Value To An Appraiser?

Real estate consumers, for the most part, don’t really understand the appraiser’s role in the home sale process. For instance, although the buyer pays for the appraisal, it belongs to the lender, not the buyer.

By law, however, a copy of the appraisal must be given to you if you request it in writing, according to the Federal Bureau of Consumer Financial Protection.

Residential appraisal professionals take a multi-pronged approach to determining a home’s value. Items considered, over which a homeowner has no control, include local housing market trends, which are impacted by economic, social and other forces. Supply and demand is an example of this.

In other words, the current real estate market.

The appraiser will use all of these factors as a backdrop when he or she studies the neighborhood, your home’s characteristics and competitive properties to arrive at the home’s appraised value.

There’s Value In A Well-Maintained, Clean Home

If you’ve maintained your home over the years, it may sail through the home inspection. And, a well-maintained home will also impress the appraiser. Making small repairs, revving up the home’s curb appeal and meticulously cleaning the home will help you in both instances.

While some appraisers say that clean properties don’t result in higher values, others, along with many real estate industry insiders, beg to differ.

The home’s condition, however, will have a direct bearing on its appraised value – known as the Condition and Quality rating in the appraisal industry. The condition rating can range from C1 (for new homes) to C6 – for homes with severe deferred maintenance issues and defects that may impact the home’s habitability.

During this phase of the evaluation, the appraiser will consider all the improvements you’ve made to the property.

Supply The Appraiser With Accurate Data

Don’t assume that the appraiser will notice the upgrades you’ve made to the home. Make a list of them, the dates they were performed and by whom.

Get specific in your explanations. Rather than “Bathroom remodel,” be more specific. “Bathroom remodel: new tub; travertine tile work; cherrywood cabinetry; Kohler sink, faucet, etc. …/Installed 2009/$15,000 cost,” says Ryan Lundquist, certified residential appraiser in Sacramento, California.

In fact, Lundquist offers a handy information sheet you can download, fill out and offer up to the appraiser when he or she visits the home.

Don’t assume the appraiser is familiar with your neighborhood

As a result of the Dodd-Frank reforms, appraisers are typically assigned jobs by an Appraisal Management Company, or AMC for short. And, these jobs are assigned “essentially at random,” Phil Huff, CEO of a real estate appraisal data company in California tells Market Watch’s Daniel Goldstein.

Which means, the appraiser may have little to no knowledge of your neighborhood.

Make a neighborhood description (quick and to the point) part of the data you supply to the appraiser. Lundquist suggests a bulleted list to make it easier for the appraiser to read quickly.

Tell the appraiser what you appreciate about the neighborhood, about your HOA (and fees you pay), anything important about its location within the town or city, anything in particular that makes your neighborhood among the “in-demand” areas of town and any information you have on pending projects that will have a positive impact on your area’s home values.

Do mention the school district if it is of high enough quality to positively impact home values in the neighborhood.

Other items to point out to the appraiser include:

  • If your lot is more desirable than others nearby, include a copy of the property survey.
  • Home features that the appraiser may not notice, such as energy efficiency.
  • Any information you may have on why a nearby home sold for less than it should have, such as a divorce or a sale to a member of the homeowner’s family.

Sure, there may not be anything you can do to change the economic forces that influence your home’s value in the eye of the appraiser, but taking care of the items that are within your control will help a great deal.