When selling a home, many people think appraisals are just for buyers and lenders. But they’re also very important for sellers. A home appraisal can help you price your home correctly, avoid problems during the sale, and negotiate better. This article explains why appraisals matter and how sellers can prepare for them.
Understanding Home Appraisals
A home appraisal is a professional’s opinion of how much your home is worth. A licensed appraiser visits your home and checks its condition, size, and features. They also compare it to similar homes that sold recently in your area. This process helps determine a fair market value.
Appraisals are often required when a buyer needs a mortgage. The lender uses the appraisal to make sure they’re not lending more money than the home is worth. For sellers, the appraisal affects whether the sale goes smoothly.
Why Appraisals Matter to Sellers
Appraisals are important for sellers in several ways. Here’s how they help:
- Pricing Your Home Right: Getting an appraisal before listing your home can show you its true value. This helps you set a fair asking price, which can attract more buyers and lead to a faster sale. According to real estate experts, homes priced correctly sell quicker than overpriced ones (Nationwide).
- Ensuring a Smooth Sale: If the appraisal matches or is higher than the sale price, the buyer’s loan is more likely to be approved. This reduces the chance of the deal falling apart due to financing issues.
- Helping with Negotiations: Knowing your home’s appraised value gives you confidence when talking to buyers. If the appraisal is high, you can justify your price. If it’s low, you can prepare to address concerns.
For example, imagine you’re selling your home for $500,000. If the appraisal comes in at $480,000, the buyer might struggle to get a loan for the full amount. A pre-listing appraisal could have helped you set a more accurate price from the start.
Preparing for a Home Appraisal
To get the best appraisal possible, sellers should prepare their home carefully. Here are some practical tips:
- Clean and Declutter: A neat home looks well-maintained. Dust surfaces, vacuum floors, and remove clutter to make a good impression (Opendoor).
- Fix Small Issues: Repair leaky faucets, squeaky doors, or cracked tiles. These small fixes can improve the appraiser’s view of your home’s condition.
- Show Your Upgrades: Keep records of any improvements, like a new kitchen or updated bathroom. Share these with the appraiser to show added value. Make sure any major work has proper permits, as unpermitted changes can lower the value.
- Highlight Special Features: If your home has unique features, like energy-efficient windows or a large deck, point them out. These can increase the appraised value.
- Make All Areas Accessible: Ensure the appraiser can see every part of the home, including attics, basements, and garages. Locked or blocked areas might lead to a lower valuation.
It’s also helpful to be polite but not too pushy. Answer the appraiser’s questions, but give them space to do their job. For instance, you might mention a new roof but avoid suggesting what the home’s value should be (HomeGo).
Common Mistakes to Avoid
Some mistakes can hurt your appraisal and cause problems with the sale. Here are things to watch out for:
- Pricing Too High: Setting an asking price far above the market value can lead to a low appraisal. This might force you to lower the price later, delaying the sale.
- Ignoring Repairs: Unfixed issues, like broken windows or peeling paint, can make your home seem less valuable. Address these before the appraisal.
- Not Being Available: While you shouldn’t hover, being around to answer questions can help. For example, you might clarify that an attic counts as living space.
Avoiding these mistakes can help ensure your appraisal reflects your home’s true worth.
What to Do If the Appraisal Is Low
Sometimes, an appraisal comes in lower than the sale price. This can happen if the appraiser misses key details or if market conditions change. If this happens, try these steps:
- Check the Report: Review the appraisal for errors, like incorrect square footage or missing upgrades. You can ask for a reconsideration of value through the lender (Investopedia).
- Provide Better Comparisons: If you know of recent sales of similar homes at higher prices, share these with the appraiser or lender. This might support a higher value.
- Negotiate with the Buyer: You could lower the sale price to match the appraisal or offer to cover some closing costs. Another option is seller financing, where you help the buyer cover the gap (Investopedia).
- Request a Second Appraisal: If you believe the first appraisal was wrong, you can ask for another one. Keep in mind this might cost extra, often several hundred dollars.
For example, if your home is appraised at $350,000 but the agreed price is $400,000, the buyer might need an extra $50,000 to close the deal. Working together to find a solution can keep the sale on track.
Frequently Asked Questions
Do I need to be present during the appraisal?
You don’t have to be there, but it’s helpful to answer any questions. Just avoid guiding the appraiser or suggesting a value.
How long does a home appraisal take?
Most appraisals take 30 minutes to an hour, depending on the home’s size and complexity (Opendoor).
Can I challenge a low appraisal?
Yes, you can check the report for mistakes and provide additional sales data. You can also request a second appraisal if needed.
How much does an appraisal cost?
Appraisals typically cost several hundred dollars, depending on the location and type of loan (Investopedia).
Conclusion
Home appraisals are a key part of selling a home. They help you set a fair price, ensure the buyer’s loan goes through, and give you confidence in negotiations. By preparing your home, avoiding common mistakes, and knowing what to do if the appraisal is low, you can make the process smoother and more successful. Taking these steps can help you sell your home faster and for the best possible price.