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One of the most important steps in a real estate transaction is the bank appraisal. When you’re selling your home, it’s vital that you know how to prepare for an appraisal.
Homeowners who decide NOT to prepare for an appraisal often regret their decision. The bank appraisal is one of the most common reasons a real estate transaction falls apart! A bad bank appraisal can often be avoided, if you know how to prepare for an appraisal properly.
In this article we’re going to discuss the best tips to prepare for an appraisal. Home sellers who know how to prepare for an appraisal greatly increase the chances that the appraisal is successful and the real estate transaction can continue forward!
If you’re selling your home and you’re not sure what an appraisal is, you first need to understand this common real estate term.
An appraisal is an unbiased estimate of the true market value of a home.
An appraisal is required anytime a borrower is going to be getting financing from a mortgage broker or lender in order to purchase a property. An appraisal serves as a safeguard for the lender who is funding the money as it ensures that a borrower is not paying more for a property than it’s truly worth, which protects the lender from over funding.
Many people make the common mistake of believing that an appraisal and home inspection are the same. There is actually a significant difference between an appraisal and a home inspection.
As you prepare for an appraisal when selling a home, it’s highly suggested that you do a complete walk through of your home. While you walk through your home, you need to be critical and look at it through the eyes of an unbiased person.
Many homeowners don’t realize the damage that neglected repairs can have during the sale process. Not only are neglected repairs one of the biggest home buyer red flags, but, they’re also a great way to turn off an appraiser.
As you’re walking through your home with a critical perspective, you need to be on the lookout for roof leaks, damaged siding, broken tile floors, and a variety of other potential repairs that scream neglect.
Homeowners often spend their hard earned dollars upgrading and improving their homes. Some of the upgrades and improvements that improve a homes value can be overlooked by an appraiser, not on purpose but mistakenly.
As you prepare for an appraisal when selling your home, it’s extremely helpful to create a list of all upgrades and improvements that you’ve made in your home. Simply leaving the list of upgrades and improvements for the appraiser increases the chance they don’t overlook a feature in your home that could impact the appraisers valuation of your home.
Recently while selling a home in Webster NY, the seller had made over $70,000 in improvements to their home. I suggested that they make a detailed list of the improvements and upgrades so we could give to the appraiser. The appraiser greatly appreciated this list and even mentioned they didn’t realize some of the upgrades and wouldn’t have been looking for them.
If you’re selling a luxury home, it’s even more critical to create a list of all the upgrades and improvements. This is due to the fact that many of the upgrades in a luxury home aren’t visible to the naked eye.
For example, a luxury home may have heated floors, a steam shower, or an electrostatic filter that an appraiser could potentially add value for if they realize the home is equipped with these features.
Curb appeal is one of the most important aspects of preparing a home for sale, but it’s also important to focus on while you prepare for an appraisal. Similar to neglected repairs, a home with terrible curb appeal can create a poor first impression for the appraiser.
The great news is that improving a homes curb appeal is one of the best ways to prepare a home for sale on a budget.
As you prepare your home for sale and prepare for an appraisal, walking around the exterior of your home can go a long way. Be on the lookout for overgrown shrubs, bushes, weed filled flower beds, and damage to the exterior of your home.
As you prepare for an appraisal, you need to treat it as you would a private showing to a potential buyer. When you’re selling a home, there are dozens of tips for preparing for showings when selling a home.
The same tips that you’d follow while preparing for showings should be followed as you prepare for an appraisal. Creating a pleasant visit for the appraiser will not guarantee it’s a successful one, but definitely can help with their overall impression of your home.
A few of the best ways to create a pleasant visit for the bank appraiser includes de-cluttering, caging your pets, and keeping your home at a comfortable temperature. If you happen to be selling your home with pets, there is nothing worse then Fido nipping at the appraisers ankles while he or she is trying to do their job, so make their visit as pleasant as possible!
Safety issues in a home are one of the most common issues resulting from a bank appraisal. One of the primary jobs of an appraiser, in addition to determining a fair market value of the home, is to be on the lookout for safety issues in a home.
As you prepare for an appraisal, you need to inspect your home for potential safety issues that can raise a red flag for an appraiser. A few of the most common bank appraisal repairs that are cited in appraisal reports include peeling paint, missing handrails, and broken windowpanes.
It’s possible an appraiser can miss potential safety issues in your home, but it’s always suggested to be proactive and repair prior to the appraisal appointment. If you’re unsure if you have any potential safety issues that an appraiser may identify, ask your real estate agent. An experienced real estate agent can often walk through a home and point out things that an appraiser may potentially ask to be repaired.
Have you ever walked into a house and were blown away by a pet odor or by the pure dirtiness?
If you have, you remember the impression you had about the house was probably not favorable. An easy tip to prepare for an appraisal is to give your home a deep cleaning.
Hopefully your home is still clean because it was being shown to potential buyers not too long ago, so this task shouldn’t be too difficult. As you’re giving your home a deep cleaning to prepare for an appraisal, completing tasks such as vacuuming, washing floors, and cleaning surfaces such as counter tops should all be on the top of your list.
Depending on the type of financing a buyer is using to buy your home can determine what the appraiser has to review. For example, if a buyer is obtaining an FHA home loan, the appraiser is going to be required to look in any crawl spaces and to take photographs.
While you prepare for an appraisal, it’s a good idea to make sure there is clear access to all areas within your home. It won’t make an appraiser happy if they have to clear an entire closet full of clothes in order to access an attic crawl space hatch.
If your home has a crawl space in the basement, knee wall storage, a garage loft, or other tough to access areas, make sure you do your best to ensure there is relatively easy access to these areas.
Finally, as you prepare for an appraisal, it’s highly recommended that you gather and provide important documents about your home to the appraiser.
Many appraisers will inquire with the listing agent to see if the can check if the seller has a copy of the instrument survey from when they purchased the home. This helps the appraiser while they perform their measurements of the property and is much appreciated by appraisers.
Other important documents to consider providing for an appraiser include information about the local neighborhood, the list of upgrades and improvements discussed above, comparable sale information provided by your real estate agent, and also any other information you think the appraiser might see as useful!
For some additional insight on how to prepare for an appraisal, we reached out to Tom Horn, a Birmingham real estate appraiser. Tom has over 25 years of experience performing real estate appraisals.
We reached out to Tom to find out what his top 5 tips were for sellers who are preparing for an appraisal. Here is what Tom provided as his top 5 tips on how to prepare for an appraisal.
“Sometimes homeowners feel that they have little to no influence when getting an appraisal on their home but this is not always the case. There are numerous things that owners can do to help prepare for an appraisal inspection and hopefully contribute to a favorable appraisal.
Homeowners can help prepare for an appraisal in two ways. The first involves getting the house ready for the appraisal inspection and the second involves collecting information to give to the appraiser during their visit.
Be sure to make repairs on maintenance items such as leaky faucets, missing electrical cover plates, missing light fixtures, and/or missing doors. While these types of repair items don’t always translate into large deductions in value they can give the impression that the home is in worse condition than it actually is.
Don’t leave anything to chance, make the repairs before the appraiser looks at the house. If the appraisal is for an FHA loan some of these repairs may be necessary before the loan closes.
The appraiser must have access to all areas of of the home including all rooms, basement, attics, and closets. If there is anything that is stacked up against doors that would prevent the appraiser from opening them it must be removed so that the appraiser can get into them. Appraisers must observe all areas to make sure every feature of the home is included and all finished area is included.
If you have made any repairs or renovations to your home in the past 15 years it’s a good idea to make the appraiser aware of exactly what was done. Examples of repairs and renovations include the following: roof replacement, heating and cooling replacement, new siding, flooring replacement, kitchen renovation, bath renovation, build out of basement or second story attic room, etc.
Repairs and renovations reduce the subjects “effective age”, meaning that if the actual age of the house is 25 years, the home might appear to be 15 years old, which could help it appraise for a higher amount. It also adds livable space and value to your home.
A copy of a survey, while not necessary, can be helpful if your lot is irregular shaped or is larger than typical. This type of information is typically available online with the local county assessor, however if you have bought any adjacent property to increase the size of your site and have a survey, you may want to provide this to the appraiser to make sure they consider all of the property.
Make the appraiser aware of how much land you have so they will know.
Are you aware of any recent sales that have occurred in your neighborhood that you believe are similar to your home?
Appraisers have access to most sales information, however private sales do occur and they may be more difficult to find unless you know the address or owner, which you can provide to them. I am always open to any sales a homeowner can provide, however that does not mean I can use them.
The sale has to meet certain criteria such as time of sale and comparability to the subject among other things. A sale is not always a comparable and the appraiser will make the final determination.
By making sure that the house is clean and in tip top condition and that the appraiser has complete information relating to repairs and renovations the homeowner can rest assured that they have done everything in their power to contribute to a good appraisal.”
The appraisal is one of the most important steps in a real estate transaction. It’s extremely important that you know exactly how to prepare for an appraisal, otherwise you’re potentially building some major roadblocks!
The above tips to prepare for an appraisal are all fairly simple, don’t cost a ton of money, and shouldn’t suck up a ton of your time. If you decide these tips aren’t important, you might be kicking yourself after the appraisal is completed.
If you’re selling a home in Rochester NY, you need to be understand how to prepare for an appraisal. The above tips and advice from an appraiser should be taken seriously. Sellers who decide to not take the appraisal seriously end up often regretting their decision. If you’re looking for additional insight on this topic, contact me!
About the authors: The above article “How To Prepare For An Appraisal When Selling Your Home” was written by Kyle Hiscock of the Hiscock Sold Team at RE/MAX Realty Group. With over 35 years combined experience, if you’re thinking of selling or buying, we’d love to share our knowledge and expertise.
We service the following Greater Rochester NY areas: Irondequoit, Webster, Penfield, Pittsford, Fairport, Brighton, Greece, Gates, Hilton, Brockport, Mendon, Henrietta, Perinton, Churchville, Scottsville, East Rochester, Rush, Honeoye Falls, Chili, and Victor NY.
© 2017, Kyle Hiscock. All rights reserved.
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