What You Need to Know to Boost Your Home Appraisal
In any real estate transaction, ensuring the buyer’s loan process goes smoothly is essential to your ability to close on time. It’s all too common, however, that something fails to go according to plan. It’s not unheard of for that “something” to be the appraisal. That’s why it’s so important for you to not only understand what the appraisal process entails but what you can do to have a positive impact on the process.
What Is an Appraisal?
In the most basic sense, an appraisal is a valuation of the property you want to buy or sell. Home appraisals are a key component of the transaction because lenders generally require one in order to approve a loan. An appraisal gives lenders assurance that the property you’re interested in is worth at least as much as it is being sold for.
Who Does the Appraisal?
Most often, an independent third party will carry out an appraisal, because the person conducting the process must have no financial stake in the outcome of the appraisal. Mortgage companies usually hire an AMC, or Appraisal Management Company, who then hires a local appraiser from their own roster. The appraisal cost is covered on the buyer side as part of the home loan process.
Factors of a Home Appraisal
So, what exactly are all of the different elements that factor into a home appraisal? Well, appraisals, by nature, are usually very detailed. Most include the following key elements:
- Details about the property
- A comparison of the property to at least three other properties in the area (known as comps)
- Details of any damaging aspects of the property. This may include the property’s overall condition, property access, a crumbling foundation, etc.
- Details about the home’s location, including looking at the type of area it’s in and how that affects the overall value
- An estimate of how long it might take to sell the home
What Do Appraisers Look For?
One good thing about the appraisal process is that they are typically uniform, in terms of what appraisers look for. That criteria most often includes:
- Property size – They will look at how big the lot is, how big the house is, the number of rooms in the home and whether or not there is room for expansion.
- Interior – They will look at what materials were used on the inside of the property and whether those materials are of the highest quality. They’ll check to see that everything was put together according to the highest standards or if things were haphazardly thrown up. They will also look at what kinds of fixtures are in the home (lights, faucets, appliances).
- Improvements – They want to know if there have been any large changes to the home, such as a kitchen upgrade or a bathroom remodel.
- Extras – They want to know if there’s anything in the home that would add value, such as a fireplace, air conditioning, a hardwired sound system or a security system. Outside, were improvements made or extras added, such as a pool, large deck or gazebo?
- Exterior – They want to know what the home is made of, what the foundation is like and what condition the property is in.
How Long Does an Appraisal Take?
In trying to determine how much time your appraisal should take, understand that there are three main steps to the process. Those are:
- Physically visiting the home
- Comparing the home to other properties in the area that have recently sold (comps)
- Creating a report
The physical walk-through usually lasts just a few short hours. It then takes about seven days for the appraiser to complete the research and write the report.
How You Can Help Make a Positive Impact
You can very much be involved in the appraisal process and even help make a positive impact. Some common things that you can do to help make an outstanding impression include:
- Cleaning up your home – Generally, a well-kept home tends to net a higher appraisal.
- Tidy the outside – Mow your lawn, pull weeds, and touch up any peeling paint.
- Keep a list of updates – If you’ve made improvements to your home, make a list of all updates, and give it to your appraiser.
- Do your own comps research – If you know of some homes that have sold in your area, recently, that are similar to your own, make a list, and give this to your appraiser.
- Touch up any and all obvious flaws – From peeling paint (both indoors and outdoors) to patching holes in the drywall, even the smallest improvement will make a difference.
- Location – Let your appraiser know of any positive neighborhood improvements underway, such as new grocery stores, schools, community centers, etc. Anything that will make your location more desirable and increase value.
Now that you have a better understanding of the home appraisal process, you can make it a relatively stress-free step. With this awareness alone, you can help the appraisal go smoothly and help the transaction happen in a timely manner.