Selling a home involves many parts, and parties. When it comes down to it, there's only two truly interested parties: you, the seller; and, your buyer. The other parties, particularly the ones with the most influence in the sale will be uninterested parties, such as the mortgage lender, the title company, the pest inspector, the home inspector, and, the home appraiser. These entities and individuals actually control the fate of the deal and in the vast majority of cases, things go smoothly.
You want to get the biggest return on your investment, so, you want the home appraisal to come in as high as possible. At this stage of the game, the buyer is hoping the price will be at parity with his or her offer, or even a tad bit lower. While you want it to come in at top dollar, that could mean it effectively kills the offer because the mortgage lender isn't likely to up the buyer's loan. A very high home appraisal isn't necessarily a good thing--it could price the home out of the neighborhood, leaving the seller to settle for a lower asking price.
Normally, you want your home appraisal to come-in right about the asking price. To get it, it's a good idea to make sure your home is ready to impress the appraiser. A lot of what your home's value is based on is out of your control, but it certainly doesn't hurt to showcase the best features.
Home Valuation and the Real Estate Market
The key to understanding a home appraisal is to understand that every home is unique. While there are homes in the area with the same livable square footage, bedrooms and bathrooms, it's not the floor plan, it's the condition of your home. Appraisers look at many things to arrive at a value, including previous comparable sales and the local market as a whole. They also take serious consideration to the home itself. The appraiser will factor-in age and upkeep. It's the improvements you've made which will help to fetch a higher valuation.
"Low appraisals are becoming a bigger problem for many would-be buyers and refinancers as home values have started to stabilize and rise in some markets. Appraisals are based on recent sales prices of comparable properties. And in rising price markets, those sales prices might not be high enough to support the newest deals." --CNBC
Of course, not every improvement is a value raiser. If you've gone so far as to over-personalize your home, that could be a detriment. On the other hand, if you've put your efforts into improving your property in a way that increases it's appeal and functionality, that will pay off. Kitchen and bath remodels, as well as nice landscaping, are on the list of proactive improvements. If you've replaced old jalousie windows with new, energy efficient vinyl widows, or had the roof replaced, those will also contribute to a higher valuation.
Factors in a Home Appraisal
A home appraiser going out to a property will have an idea of what the house is worth before ever stepping foot inside. This means the more wow your property has, the better impression it will make and thus, result in a higher value. Here are some things that factor into a valuation:
- Curb appeal is big. Some homeowners forego professional landscaping because of the initial cost. If your home is landscaped, you've got a big plus--a well landscaped home, especially one done professionally will up the value between 10 and 15 percent. Two other things the appraiser will take into consideration are lot size and the view.
- Location, location, location. This isn't just a cliche, it's a very big part of your home's value. If you're in a HOA community, it's probably the case the other homes or units in your community are well maintained. If some homes are in a state of disrepair, there's little you can do but inform the association. Should your property be in a non-HOA neighborhood, contact code enforcement.
- Structurally sound and well sealed. A home inspector will check for structural problems, but an appraiser will go beyond that and consider cosmetics. In addition, an appraiser will note the home's energy efficiency.
- Aging well or poorly. Homes age and that's an indisputable fact. It's how well you've maintained your property that will help the appraiser to determine a value. The better the upkeep, the higher the valuation.