The Seven Key Points you Should Know about Home Appraisals

One of the most common mistakes many home sellers make, especially those who are attempting to sell on their own, is to price their home either above or below it's fair market value. This can be an extremely costly mistake either way. If you happen to price your home below its market value you run the risk of either selling it quickly for less than you could have gotten for it or having buyers ignore it because they believe the low price is an indication there's something wrong with it. On the other hand, if you happen to price your home too high it could sit on the market for months before it ever sells.

To avoid this problem many homeowners are opting to pay for a home appraisal before they ever put their home on the market. Traditionally, home appraisals have not occurred until a contract has already been made on the home and the sale has been about to take place. In this way, lenders and buyers could be assured they weren't paying too much for a home. Post contract home appraisals are typically paid for by the buyer in their closing costs. Today; however, sellers are more than willing to shell out the $300 or so to ensure they price their homes accurately. In many cases this has been due to a cooling down of the real estate market and a large influx of inventory. Sellers who want to make sure their homes do not sit on the market for longer than necessary see the cost as more than worth it if they can sell their homes quicker and for more money.

Pre-contract Home Appraisals

In the past sellers have commonly relied on the advice of their real estate agents regarding the price at which they should set their property. The rising trend in pre-contract home appraisals does not necessarily indicate a flaw in the advice of professional real estate agents; however, independent unbiased appraisers are often able to arrive at a price that is more in line with what the home buying public is willing to pay for a particular property. In some cases, when a home has been sitting on the market with no serious interest from buyers, agents are even beginning to recommend their sellers invest in an appraisal to find out whether the price is really right or not. These home appraisals are helping home sellers be more competitive in a market that is rapidly flooding with competition.

When an appraiser takes a look at a home he or she often notes items the sellers and even the agent may be prone to overlook. Such items include the visual location, proximity to important education, employment and entertainment centers and even flaws in the structure itself. Ideally, the appraiser looks at the home just as an interested buyer would and appraises the home accordingly. The final appraisal report will also take into consideration factors of the current local real estate market that could affect the value of the home.

Beyond the fact that home appraisals can help home owners to set the right price for their properties, they can also point out problems that could be easily cured before the home is ever placed on the market. When considering obtaining a pre-contract home appraisal there are seven important facts you should know and be aware of. Taking the time to educate yourself regarding home appraisals will help you to obtain a better, more accurate appraisal and respond to it in such a way as to gain the most from it.

1. Always find out exactly what the appraisal report will include
Remember, detail is important. The scope of the appraisal should include specific details about the house as well as the neighborhood in which it is located. In addition, comparisons should be made between your home and similar homes that have sold within a close proximity recently. The appraisal should also include information regarding the current local real estate market as well as any problems that were noted in regards to the home and how they might affect both the value of the home and how long it will take to sell the property.

2. Find out how the appraiser intends to approach the appraisal
To some degree, home appraisals are always going to be subjective. That said; however, a professional appraisal will also have enough information, education, experience and research at their fingertips to develop an accurate and sound appraisal.

3. Always make sure you know how to obtain a copy of your appraisal
Traditionally, home appraisals were paid for by the buyer and were only available to the buyer and the lender because they were funded by the buyer. If you're paying for a pre-contract appraisal; however, the completed report should be made available to you immediately.

4. When you receive the copy of the appraisal, take the time to really review
Avoid the temptation to skip to the bottom line and find out how much the appraiser thinks your house is worth. While that is important information it is also valuable to find out why the appraiser arrived at that decision. It could well be that some minor imperfections and flaws could be corrected before you ever place your home on the market that would not only increase the value but decrease the amount of time the home is on the market as well.

5. Find out the certifications and education of your appraiser
In some states there are few requirements for an individual to become a home appraiser. Don't just hire anyone. Remember the value of your home is riding on the experience of your appraiser.

6. Find out how many home appraisals the appraiser has performed
It won't matter in the least if the appraiser has been in the business for twenty years if they have performed less appraisals than someone who has only been in the business for two years.

7. Don't put off getting an appraisal
You can typically expect a professional appraisal to cost around $300 or $400 and while that may seem like a large chunk of change to lay out at the moment, in reality it could put several thousand dollars back into your pocket when you do sell your home.

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