A Few things to Know About Home Appraisals

Home appraisals are always a daunting aspect of selling a home. If you’ve found a buyer who is willing to pay your asking price – or who has put forward an offer that you’re willing to accept – that buyer will need an appraisal of your home in order to secure financing from a lender.

So, what exactly is a home appraisal? Put simply, it is an opinion about the value of a property, based on recent, similar area home sales as well as the features and condition of your home. Appraising a home is more of an art than a science, since there are not hard and fast rules to guide appraisers about which comparison properties they take into account, or how similar those “comps” are to your property. It’s quite possible for two different appraisers to come up with two different property values.

Here are a few things to keep in mind when it comes time for your home to be appraised for a potential sale:

• Appraisers take many things into account. An appraiser confirms the existence of a property, determines its square footage (updated or “finished” basements are not included in this determination), and substantiates that any claimed upgrades or improvements have been made. The appraiser also measures the property and verifies the number of bedrooms a home has – as defined by the presence of closets and windows.

• General cleanliness doesn’t affect an appraisal. An appraiser doesn’t care whether the bookshelves are dusty or the kids’ toys aren’t picked up. These types of things will not affect the appraisal. However, you should make sure to fix anything that might influence the value of your home, such as cracks in walls and other retouching. In general, it’s best to have any renovation projects finished rather than in process when the appraiser arrives. It’s important to note, however, that an appraiser will not assess your property to the same degree that a home inspector will.

• External factors can affect an appraisal. In addition to examining your property, an appraiser may take into account its location, recent foreclosures in the neighborhood, and new developments in the area – anything from landfills and power substations to public works and parks.

• Appraisals have a “shelf life.” Because of the fluid nature of the real estate market, an appraisal can only be accurate for a certain amount of time. After several months have elapsed, it will likely be necessary to secure a new appraisal.

• You can ask for a second opinion. If you feel an appraiser has assessed your home at a lower value than you feel it is worth, either you or the buyer can request a second appraisal. If you request a second appraisal, you will be responsible for paying the second time around, but it may be worth it to prevent a sale from collapsing.

• You can dispute an appraisal. If you feel that the appraiser determined your home’s value using faulty information, you can contact the lender and dispute the appraisal.

• Real estate appraisals are required whenever a property is financed. This means that you will need an appraisal if you are refinancing your mortgage – and not just in the case of a sale.

As always, your real estate agent is your best resource for handling concerns about an appraisal. He or she will be able to help you avoid overpricing your home and opening yourself up to problems securing the appraisal that you need.