With home prices going up fast these days, actual sales can outpace the appraisal process, sometimes resulting in a low appraisal. Bummer!
Even though sellers are not key players in the appraisal, here are a few reminders of how the appraisal process works and your options for participating in it.
Understand this fact: The Appraiser Works for the Mortgage Lender
Appraisals are part of the traditional home purchase process. Lenders require them for sales and most refinances, too.
A home appraisal is an independent opinion of your home’s value, performed by a home appraiser who is licensed by the Texas Appraiser Licensing & Certification Board in Austin.
The lender may order the appraisal either directly from an appraiser or through an appraisal management company that coordinates the process on behalf of the lender. The appraiser’s job is to give an opinion of value for the lender to make a judgment call on the amount of money they will loan on the property.
How do they reach value?
Appraisers are trained professionals, and this is how they often reach value:
- First, they derive a base for your home’s value based on the recent sales prices of homes that are comparable to yours in terms of bedrooms, bathrooms, style, and square footage.
- Then, accounting for features and amenities that make your home different, the appraiser applies “adjustments” to that base value.
This methodology is called the “Sales Comparison” approach and the result is your home’s appraised value. It’s the most common appraisal method used by lenders.
What can you do?
If you’re getting a home appraisal, there are several things you can do to maximize the final home appraised value. And it’s not that difficult.
As a homeowner, you can’t affect the sales prices of your home’s comparable properties, but you can help your appraiser understand how your home stands apart from these homes. This, in turn, can affect your home’s adjustments, resulting in a higher appraised value.
You Can Talk to the Appraiser
Real estate agents are allowed to communicate with the appraiser since you have an interest in the real estate transaction. You can also be at the property when the appraiser is there and answer her questions. Even so, give the appraiser space to do her job.
You Can Provide Documents to the Appraiser
Documents such as plats, surveys, deeds, covenants, neighborhood details, and comparable sales are all relevant items the appraiser may be able to use.
With home appraisals, every valuation dollar can matter. With that in mind, here are a few tips for maximizing your home’s appraised value :
- Be home for your appraisal so you can answer the appraiser’s question if there are any.
- Mention any new roofing, flooring, HVAC, plumbing, or windows you’ve installed since purchase.
- Don’t mention projects or repairs you’re “about to undertake”. Appraisers don’t credit for unfinished projects.
- Make minor household fixes prior to the appraisal (e.g.; leaky sink, running toilet, peeling paint).
- Present a tidy home. This can contribute to a higher “overall condition” adjustment.
- Lastly, schedule the appraisal for a time that is convenient for your entire household.
An appraiser needs to see, measure, and take photos of every room in your home. If a room’s door is closed because of a resting child, for example, the appraiser may need to schedule a second appointment to complete the appraisal, and that can raise your appraisal costs.
What to do With Your Concerns About the Appraisal Report
An appraiser cannot discuss their reports with anyone but their client—the mortgage lender—and anyone the lender designates to receive the information. Contact the lender in writing if you think there are errors in the report or if you want the appraiser to consider additional information.
Like real estate agents, appraisers are required to be competent in the geographic area in which they work. If you think the appraiser isn’t competent to appraise property in your area, contact the appraiser’s client—the lender who ordered the appraisal—and share your concerns. You can also contact the Texas Appraiser Licensing and Certification Board, which enforces the rules and laws appraisers must follow.
The Bottom Line
Please, don’t push! Even though the home appraisal is a very personal, impersonal event! As a seller, you may be able to play a passive role in the process. The appraiser will be more likely to listen to you if you understand how important his work is toward your buyers to get the loan they need.