Between applying for a home loan and the close of escrow comes a most crucial step: the home appraisal. Since the transaction that got you to this point is one in which a buyer and seller agreed on a price, the appraisal is more likely than not to match the purchase price.
In fluctuating markets, however, especially those heading up after being down for some time, low appraisals occur frequently. For instance, as the nation climbed out from under the explosion in distressed sales, it took some time for home appraisals to even out. It is understandable, given that appraisers were basing market value on homes that had foreclosed or sold via a short sale.
Although there is nothing a homeowner can do about nearby houses that bring down market values in the area, there are things he or she can do to help achieve a higher appraisal.
1. Arm the Appraiser With Accurate Information
"The reality is that the appraiser is only there for 30 minutes at most," Brian Coester, chief executive of CoesterVMS, an appraisal management company, tells CNBC.com
. Thirty minutes to make a good first impression when the appraiser is distracted with appraisal duties is a tall order.
Put together an information packet that the appraiser can take with her when she heads back to her office to crunch the numbers. Here are some items to include in the packet:
- The facts – Make a list of the facts about your home, including the street address, the number of bedrooms and bathrooms and the year it was built. Yes, the appraiser has access to these details, but verification from you can’t hurt.
- A list of recent sales – The appraiser has access to area home sale prices but there is always a possibility of an error or two creeping in. Ask your real estate agent to print out a list of comparable homes in the area that have recently sold for prices that help justify your price.
- Inside information -- In addition, any information you may have that the appraiser can’t possibly be aware of – such as the fact that your next door neighbor sold his home at a drastically reduced price to be able to quickly relocate to his new job out of town – should be included as well.
- Improvements – Let the appraiser know about improvements you’ve made to the home, the date they were made and the contact information for the contractor who performed the work. Include information about new floors, windows, countertops and a new roof. If you finished the basement, list that. Any work on or replacement of major systems should go on the list.
2. Spiff It Up
While you don’t need to stage your home for the visit from the appraiser, you do want the home to appear as if it’s been maintained.
“Things like overgrown landscaping, soiled carpeting, marks on walls — those do affect value and are part of the property’s overall condition rating,” Dean Zibas, of Zibas Appraisal in San Clemente, Calif. tells the Wall Street Journal
Certified residential appraiser Ralph J. Vaccari, of Marblehead, Mass. agrees. “It’s important to realize, though, that a dirty or unkempt home can increase its appearance of wear and tear beyond normal, and that condition can, in fact, affect value.”
So get busy cleaning up the landscaping and spiffing up the interior of the home in advance of the appraiser’s visit.
3. Make repairs
The appraiser will assign an “effective age” to the home which is based on the condition of the home and any updating performed.
“Say you have a cracked window, thread-bare carpet, some tiles falling off the shower surround, vinyl torn in the laundry room, and the dog ate the corner of the fireplace hearth, these items could still add up to an overall average condition rating as the home is still habitable, however your effective age will be higher resulting in comparables being utilized which will have the same effective age and resulting lower value,” Doreen Zimmerman, an appraiser in Paradise, Calif. tells the Wall Street Journal.
Make the repairs that, if not made, will age the home in the eyes of the appraiser. Some of these may be as simple as replacing torn window screens, others may be more substantial.
While the sales prices of comparable properties are relied upon heavily to ascertain a subject property’s value, appraisers do not solely rely on them. All pertinent data, including intangible aspects, help determine the closest estimate of the value of a property. These are the aspects of the appraisal process that you can affect.