Almost any home transaction; whether a home sale or refinancing, involve home valuation process, also known as home appraisal. By definition, an appraisal refers to the estimated value of a property.

An appraised value of a home can be done after property inspection and doing “comps”, short for comparison; a process in which a real estate professional refers to recently sold homes in the area to help with your home appraisal.  

Home sellers need to come up with a home valuation to know how much to sell it, while lenders require home appraisal to determine the amount a mortgage it needs to dispense to home buyers/borrowers in order to acquire the property.

Mortgage lenders want to protect their interests and go to great lengths to avoid falling victim to appraisal fraud. But do you know that this can help home buyers and sellers, too? Here are some of the things you may not know about home appraisals.

1. You Can Question the Appraisal

As a seller, you may already have an idea of how much you’re going to sell your property for. However, an appraisal is necessary to come up with a proper valuation.

Once the result comes out and you feel that it’s way below the amount you were hoping for, ask the mortgage lender whether you can have a second appraisal or the process for protesting home valuation results.  

Before doing this, make sure you have all the documents you need to support your claim. Ideally, you should prepare the before and after photos of your home if you’ve done remodeling and renovation projects. Any improvement should also be supported with receipts.     

Ask your appraiser for the comps that he or she has done and compare it with the records that your realtor has access to. Your real estate agent should be capable of comparing the property valuation of the ones used in the appraisal as well as the other sold homes in your area, in the hopes of getting a better price. 

2. Comparable Sales are Critical in your Home Valuation

Real estate appraisals aren’t just about your property’s size, amenities, and overall condition. In coming up with what the real estate world known as a “fair market value” for your home, appraisers look at prices of recently sold and similarly structured properties located in the proximity of your house.   

The comparable sales or “comps” are generally included in an appraisal report. Aside from location, the appraiser will also make sure that the comps match your property in terms of size, age, and condition. The details for these houses are culled from the multiple listing service (MLS), a comprehensive database of property listings in a locality.   

A comp should also be recent. So, if you want to ensure that you have an up-to-date information and possibly the best price for your property, look for an appraiser who has access to the most recent comps.

3. Short Sales Impact Your Home Appraisal   

Aside from “comps”, your home valuation may also be affected by the overall housing market conditions. For instance, if the whole economy is experiencing recession, where foreclosures and short sales are pervasive, it can pull down your home valuation.

A short sale in real estate refers to the condition where a financially desperate homeowner sells a property for an amount less than the figures owed on the mortgage. Home transactions driven by distressed sales don’t bode well for a homeowner who’s eyeing to sell his or her home.

The valuation of your home is dependent on identical-looking homes, which you and your neighbor may both share, an unkept property sold in your vicinity can also negatively impact your selling price.    

4. Making Your Home Neat Could Help You Get a Higher Price

Making your home clean and organized may help you get a higher selling price. After all, an appraiser is a human being, and more often than not, his or her experience in inspecting your home will impact the valuation outcome.

With appraisals only lasting 20 minutes on average, the appraiser’s first impression may help you get the selling amount that you’re hoping for. A well-maintained house evokes positive feelings, and it doesn’t take too much effort to keep it neat.  

5. Repairing Any Damage Helps

Besides keeping your home organized, you need to fix the damages in our property to get a higher valuation. That’s because the state of your home is an important consideration in coming up with an appraisal.

Depending on the kind of repairs your property would have to go through, it’s best to have them done as soon as possible. Besides helping you get a higher price, making the necessary repairs can also help you retain your reputation as a responsible homeowner.  

The Bottom Line

A home appraisal is necessary for every home transaction. It can, however, come with challenges. For instance, when an appraisal value is lower than expected, the transaction may be delayed or canceled.

If you’re selling your home and getting it appraised, consider the points discussed in this article to allow the process to work to your advantage and maybe secure a higher selling price.