The term “Market Value” refers to the price for which a property will sell if offered openly under normal market conditions. The market value expressed in an appraisal is the professional opinion of the certified appraiser based on all factors in the appraisal process.
A Comparative Market Analysis (CMA) prepared by a Real Estate Agent, also provides you an opinion of a properties market value based on a comparison of similar properties within the same area. A CMA can be provided to you by your Realtor at no cost, while the appraisal is usually requested by the lender financing the buyer.
Preparing Your Home for an Appraisal.
Doing everything you can to ensure your property is at its optimum condition prior to the appraisal is critical. The pending offer you have from a buyer may be contingent on the properties appraised value. If the appraised value is not equal to or greater than the sales price, the buyer may terminate the contract and request a refund of the earnest and option money.
Clean, Inspect and Repair Everything
This likely sounds obvious, so that is why we covered it first. First of all, a home that is clean on the outside, as well as the inside, gives off a good impression. It shows you have pride in homeownership and may deter the appraiser from being too picky on a small item.
Consider painting the interior and exterior to remove any scratches, and blemishes on the painted surfaces. Make your walls and cabinets look new again.
If you think an appraiser will not notice a dripping faucet, think again. Use your Seller Disclosure Notice as a checklist to verify again that you have no known defects. If you find some, have them repaired before the formal appraisal date.
Be Accommodating to the Appraiser
Appraisers are professionals that have a job to do. They have schedules for their work and deadlines to meet. Making their job easier could make the appraisal lean more in your favor.
Answer the appraiser’s call, or at least return the message as quickly as you can. Try to meet the appraiser at the home based on the appraiser’s first suggested date if possible. Make sure the appraiser has an easy way to access all parts of the home such as attics, basements, and crawl spaces.
Ask Your Real Estate Agent to Be at the Appraisal
If you are hoping to sell your home soon, ask your real estate agent if they can be present for the appraiser’s visit. Since the agent is representing you for the sale of the home, their input can be valuable to the appraiser.
The agent can bring multiple comparable sales to the appraiser. Ideally, these comparable transactions will all be similar to your home in size, layout, and major features. This can be evidence to the appraiser of the home’s current value.
Also, the agent can point out any improvements made to your home within the last 2 or 3 years that may not be present in the comparable transactions. This can also boost the value of your property.
Judge Your Home in $500 Increments
Appraisers deal in general terms. They may look through the home and see a few repairs that need to be made and consider it to be $500 worth of repairs. They may also look at neglected maintenance issues and deduct $500 for each needed repair. This can quickly add up to major deductions on your home.
For example, suppose the appraiser sees a few door hinges that are old and need replacing, or the door itself needs to be replaced. That immediately translates into a $500 reduction. Next, the appraiser may see that the air conditioner coils need cleaning or that the septic system needs to be pumped out. There goes another $500 deduction.
Clean Up the Outside
Making the yard look presentable is one of the cheapest ways to improve the home’s appearance and to increase the overall appeal of the home. Having a tidy yard clear of debris and clutter makes the place look inviting.
Take time to mow the grass, trim back the bushes, and get rid of any stray branches in the yard. This will also be a good time to clean out the gutters and wash all the exterior windows & doors. Giving the home a tidy, clean appearance on the outside sets the stage for how the appraiser will view the home.
While cleaning, look for any necessary repairs. Broken window panes, rotten trim, damaged shutters, and chipped paint should all be fixed before the appraisal.
Provide a Detailed List of Improvements
Owning a home is a constant flow of maintenance, repairs, and improvements. While the appraiser may get a good impression of the home, the appraiser will not be able to tell how recent any improvement was made nor the price of the work.
Keep receipts and contracts organized so that you may show everything to the appraiser in an orderly fashion. The following is a list of common items that an appraiser will use to judge the value of the home
Changes to flooring such as adding new tile or hardwood
New heating/air conditioning system
Any significant plumbing repairs such as a new septic tank or sewer pump
Any addition to the home such as adding a new room or adding a deck on the back yard
Improvements on the land such as adding a pool or building a storage shed
Major revisions such as a kitchen remodel, bathroom remodel or bedroom remodel
In general, anything that improves the functionality of the home or makes it more modern will improve the value of your property. By providing accurate records to the appraiser for any of these major improvements, the actual appraisal can reflect the work that has been completed over the last 2 or 3 years.