Although getting your home appraised is a common experience, you’d be surprised how many sellers still admit that the process is pretty intimidating and confusing. There are many home appraisal myths and misconceptions about what an appraisal actually is, why they are needed, and how they truly reflect the value of your home.
It’s exciting that you’ve finally gotten an offer on your house, but the home appraisal is really what affects the sale the most.
What is an appraisal?
An appraisal is an estimate of value gathered by the appraiser, which is done through an inspection of your home. The property is then compared to recent sales of similar houses located in your community or close by neighborhoods.
The appraisal is important because it is an impartial and expert opinion of the value of your home. Getting your home appraised removes emotion out of the equation between the buyer and the seller and estimates the value of the home based off of professional data and expertise.
Many people underestimate just how important this step is in the home buying process, and don’t prepare well enough for it. There are a lot of home appraisal myths out there , but today we will only cover the 5 most common.
Hopefully this will help clear things up a bit and make the home appraisal process a little easier to understand!
Here are the Top 5 Home Appraisal Myths
1. Appraisal is the Same as an Inspection
Both the inspector and appraiser do a walk through of your home, so it can be easy to confuse the two. However, they both have completely different jobs and licensing requirements.
The inspectors job is to reveal any issues with the home– or what may become an issue down the road. An appraiser simply finds the market value of your home.
An appraiser considers many factors when they do this. For example, the home’s condition, location, and square footage. What is the quality of the flooring? Plumbing? Electrical system? They are experts at using data to make their final report for the property.
2.The Appraiser Works For the Buyer
Appraisers are hired by and work for the lender. No need to worry that your appraiser may sway prices or have pressure put on them from anyone. It is against the law to coerce an appraiser to hit a certain value. They are trained to remain ethical and keep things completely unbiased.
3. The More Upgrades, the More My Home is Worth
False. Appraisers stress moderation in assuming how much value your sparkling new pool or fancy kitchen will add directly to your home. This situation can be hard for sellers to wrap their heads around after all the hard work they’ve put into their homes.
Another example is your upgraded basement. Not to say basements have no value whatsoever, but appraisers measure by square footage of the home which excludes any rooms below grade. It just doesn’t technically add space as you may think it does.
Appraisers also frown upon replacing home amenities for another. For example, turning the 3 car garage into a gym or bar. “Most people want to park their cars where they are safely protected from the elements and break-ins,” advises Orange County Appraiser Austin Ferald
When appraisers do a walk through, their eye looks right through any fancy staging or decorating. Appraisers aren’t saying don’t be prepared, just understand that no matter how beautifully you decorate your home, they are making bigger judgments on factors like the square footage, number of rooms, and other measurable data.
To get a better break down of what upgrades DO increase the value of your home, read HERE.
4. Appraisers Already Know The Value
Believe it or not, appraisers don’t know the value of your home as soon as they walk through your door. Many people think that appraisers will “just know” the total value of a property just by looking at it.
It is actually a step by step process they are trained to follow to come up with a final assessment. They make their assessment by exploring your property and learning the quality and condition of it as a whole.
The first step they take is pulling up comparable listings nearby over the last few years. They’ll then use that data along with what they’ve seen from touring your home to make their FINAL assessment.
Understand and research the entire appraisal process first before jumping into it. That way you are well versed on how it goes and won’t be hit with any surprises.
5. You Can’t Protect Yourself from a Short Appraisal
There are some things you CAN do to protect yourself from receiving a short appraisal. Understand that this report simply provides guidance for the lender.
Here are some tips for both a buyer and a seller on how to prepare for getting your home appraised:
If you are a buyer:
-Tell our lender to find an appraiser who is local-from your county or a neighboring one.
– Many appraisers are pulling data out of MLS, so they will appreciate any good information you give them about the community/homes around you
-Meet the appraiser when he or she inspects the home. Share your knowledge of recent short sales and foreclosures that may skew the comps
If you are a seller:
-Before you list your home, get your own appraisal.
-Use this appraisal to set a realistic listing price for your home.
– Giving this appraisal price to the buyers appraiser isn’t offensive. They appreciate more information they can add to their research and data.
– Question the low appraisal. Some information may have been overlooked during inspection.
So in closing….
Home appraisals hopefully seem a little less scary after reading our breakdown of these home appraisal myths. Their job is to simply find the value of your home and if you feel like their inspection or final price is off, you can always ask questions.
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