Today, with the market moving so fast I wanted to share some insight on Appraisals. Appraisals can be intimidating for sure but if you understand the process you will be in a position of power as you move through the buying or selling of your home.
Did you know as a seller you can have your agent prepare a list of upgrades or even send comps to the appraiser to share your perspective on why your home is worth the asking price?
On the flip If you are a buyer the process will look different: The bank will send an appraiser to asses the value.
The appraisers sole purpose is to protect the bank’s investment in your home. The bank wants to know that ta buyer isn’t overpaying, so if the buyer ever defaults on the loan, the bank can recover its investment.
It’s really that simple.
To determine the home’s value, the bank’s appraiser will compare properties, similar to yours, that have recently sold in your neighborhood. These are called comparables, or “comps” for short. In addition to comps, the appraiser will also consider things like the home’s condition, age, and size to determine its value.
Once the value has been determined, you’ll receive an appraisal packet with all of the details.
Here are the 4 main components of an appraisal:
1 A complete walk-through
The bank’s appraiser will walk through the entire house to get an idea of the overall condition. They’ll also confirm the tax records and note any upgrades done to the home.
2 Home Details
After the appraiser complete’s the walkthrough, they’ll compile all the details of the house into their appraisal software. They’ll enter important details like square footage, room count, bathroom count, and measurements.
3 – Comparable’s
The appraiser will find comparable homes that have sold recently in the area. They’ll note all of the similarities to your home and include pictures from the MLS.
4 – The Evaluation
The most important part of the appraisal packet is the evaluation. This evaluation is the amount that the appraiser deems the home is worth. This dollar amount will be sent to the bank, the buyer, and the seller so all parties know how much the bank is willing to lend.
If you’re selling a home and the appraisal comes back low, the buyer will probably ask that you lower the price – which means less money in your pocket. This is why it’s so important to have a great real estate agent on your side. A good Realtor® can price the home correctly to begin with and communicate the value to the appraiser throughout the appraisal process.