Accepting a contract on your home sale is definitely an exciting event. But remember, if the buyer is financing the home purchase with a mortgage, you will have to “sell your home” twice to make it through the transaction… once to the buyer and then again to the appraiser.
Every home sale involving a traditional mortgage requires an appraisal from a third party. This enables the lender to verify the value of the home is in line with the contract price. If the appraisal comes in low, the lender may not lend the same amount at the same rate they previously quoted. If that happens, there is a very good chance that you as the seller may have to cough up some of your profits to make it to the closing table.
How to get a home appraisal and a few home selling tips worth investing some time in:
Home Appraisal Tips – Provide an in depth list of property features and/or upgrades.
If you have filled the house with upgrades, you want the appraiser to know about it. New upgrades (less than 6 months old) will bring you the most value, so make sure to list the date of installation, especially if the renovations are relatively recent. If the upgrades were expensive, feel free to share what you paid for them as well. Putting numbers on your sheet will hopefully translate to a big number on the appraisal. Don’t leave anything out, the more items on the sheet, the more it proves you invested in the home.
Home Appraisal Tips for Sellers – Show the comparable sold homes you used to price the house.
Most appraisers and lenders are going to use the Sales Comparison Approach to value your home. This means they are finding other homes very similar to yours in close proximity (likely in your neighborhood) that are similar in size, number of stories and finishes. If you have 3-4 recent sales in the neighborhood that you think help your value, list those along with the details of the properties and why you chose them. If you feel like your house is worth the same or more than those comps, explain why. Check out our blog article “Pricing – It’s all about the comps” for help picking out comparable sales.
Additional point of note: If your neighborhood has pockets with different values, make sure to note that. For example, if your section of the neighborhood historically sells at a higher price or price per sq/ft than others, make sure to point that out. Many appraisers don’t know the subtle nuances of large neighborhoods, so pointing these things out can have an extreme affect on your appraised value.
Have the house looking and feeling great.
When anyone walks through a house, it will evoke some kind of emotional response in that person. You want it to be a positive one. This may not have an affect on a seasoned appraiser who has looked at hundreds if not thousands of homes, but it certainly can’t hurt. Have the house looking good, smelling good and feeling good. Clean up, set the thermostat to a comfortable setting and don’t be afraid to bake some cookies and leave them out next to your packet of information. You want the appraiser walking out of your home with positive vibes pouring out the door.
Be there at the house with the appraiser, if it makes sense in your case.
This is the only one that could hurt you if you end up having a less than stellar interaction. We usually only recommend you being there if your home has a lot of things that need to be visually showcased in order to see or understand the full value. For example, if you have installed a complicated whole house electronic system that may otherwise be overlooked, it’s not a bad idea to be there to showcase it. If you do decide to be there, make sure to be polite, respectful and not the least bit overbearing. Most appraisers are busy, so when they do their job, they are all business. The last thing they want is someone telling them how to do it.
You typically only get one crack at this, so make it count. It’s very difficult to contest an appraisal and win as a seller. Challenging an appraisal is a long, drawn out process that has a relatively low rate of success. So if you don’t want to fork over more money or lose your buyer, it’s absolutely worth your time to put in the upfront work.
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Real Estate Real Fast EP1 (with Romney Navarro, hard money lender expert and CEO of Streamline Funding)
If you’re looking to do some serious real estate investing, you might be interested in using a hard money lender. While most homeowners go with conventional financing, a hard money lender can be more useful for buying and selling properties.