June 12, 2017
Last week we discussed the lending process. Certainly, that includes obtaining an appraisal from an appraiser. Orion’s brokers spend a lot of their time talking to buyers, and sellers, about the appraisal. An appraiser isn’t all-seeing & all-knowing, and our brokers are good at setting expectations of clients by telling them…
The appraiser won't know what your home is worth the second she/he walks in the door. A good understanding of the appraisal process will help you comprehend how your home's value is determined. First, an appraiser will pull comparable listings, called “comps” from the nearby area. These are homes similar in style, location, and footage sold within the past few years. Then, the appraiser will come by your house to determine its condition and quality, as well as any other factors that would affect the cost of the home, and use all that information to make an accurate assessment.
Before the appraiser arrives, gather all the information you have about the house and send it over to your lender or broker. Keep a list of major improvements as well as detailed info about the age and condition of the roof, HVAC systems, and major appliances. For any DIY (do it yourself) projects, make sure you have the original permits.
Orion’s experienced broker know that those expensive home improvements are not necessarily a value lifter. Appraisers stress moderation in assuming how much your new kitchen, pool, or finished basement will add directly to the worth of your house. You’ll likely only see a fraction of that returned in value. Most appraisers use ANSI standards for measuring the square footage of a home, which excludes any rooms below grade. That doesn't mean your basement has no value, but it doesn't technically add space.
Our brokers will tell clients that before listing, make sure you and your agent take a realistic look at what your home offers. Are you including the basement square footage in the total? Are you hoping no one will notice your roof isn't new? Be sure not to fudge the numbers. Padding the square footage will only result in the appraiser going back to the comp drawing board pushing the appraisal completion deadline out further.