This question is actually a lot more common than you think; almost every buyer and seller asks this. Obtaining a valuation (or appraisal) is a critical step in the home-buying (or selling) process.
What’s an Appraisal?
An appraisal is a neutral estimate of the fair market value of what your home is worth. Most lenders usually require an appraisal during the mortgage process to assess whether or not the amount of money requested by the borrower is an appropriate amount.
This can include recent sale information from similar properties such as their condition, location and other insights as to how its location impacts its value.
So who appraises the property and what guarantees that their estimate is fair?
Appraisals are conducted by highly trained professionals who are licensed to determine the value of homes fairly and without bias.
While no appraiser is infallible, their opinion of the value of your home is informed by rigorous training, tests, and tons of experience. Appraisers and their employers are heavily regulated and so the consequences of misleading or biased appraisals can be severe. That’s why they work hard to remain impartial and keep personal value judgments out of their work.
What is included in an appraisal?
Appraisers are looking at the condition of what is permanently part of or attached to the property. They are not evaluating your décor or furniture or anything that’s not part of the actual property. Most important are your home’s physical characteristics such as age, square footage, number of bedrooms and baths, lot size, location, view as well as the observable condition.
Can I raise my appraisal value?
Of course. If you are looking for cost-effective ways to increase your home’s sale value, check out this our Curb Appeal article; or keep reading for info specific to Appraisals.
Here’s a couple pointers:
- Structural damage, such as wall cracks, mold, soiled carpeting, pests and odor will definitely give you a less-than-satisfactory appraisal report. Find ways to fix these issues pronto!
- Curb appeal is a must. Overgrown bushes and poor landscaping can plummet value, especially if property values are already low in your neighborhood. Take time to make the outside of your home so beautiful you’d want to buy it all over again.
- Take notes of improvements that you have made that an appraiser may not notice, such as a new roof or a re-tiled floor. These improvement will not give you a dollar-for-dollar increase in value…but it definitely helps. The newer your property appears to be, the higher the appraisal value will be.
So to answer the question “Do you really need an appraisal?”…it depends!