Everything Sellers Need to Know about Home Appraisals

What is a Home Appraisal?

A home appraisal is an evaluation of your home's value by a 3rd party. An appraiser is hired to examine your home and compare it to similar homes in your area that have sold recently. This helps determine the fair market value of your home. The appraisal report includes information about the home's condition, size, location, and features, as well as a list of any recent improvements or upgrades you've made.

Why Do You Need a Home Appraisal?

A home appraisal is required by most mortgage lenders as a condition of loan approval. The lender wants to know that the value of the home being purchased is in line with the loan amount being requested. If your buyer is paying with cash, this topic will not come up in my experience. 

How is a Home Appraisal Conducted?

The process of a home appraisal begins with an appointment with the appraiser. The appraiser will take a thorough look at your home and might ask you about any recent improvements or upgrades if you are home. They'll also measure the square footage of your home and take photos. Then, the appraiser will look at similar homes in your area that have sold recently and use this information to determine the fair market value of your home.

What Factors Affect the Home Appraisal Value?

There are several factors that can affect the value of your home appraisal. Some of these include:

The location of your home
The size and condition of your home
The current state of the housing market
The age and condition of your home's appliances and systems
Any recent upgrades or improvements you've made to your home

What Happens if Your Home Appraisals for Less Than the Sale Price?

If your home appraises for less than the sale price, it can be a bit of a setback. But it's not the end of the world. Your Realtor will help you negotiate with the other party. If the buyer has an FHA or VA loan, the appraised amount will "stick" with the property for 6 months. So let's say you cancel the contract with your current buyer. If your new or 2nd party/ buyer is also FHA. They will use the same appraisal. This is sometimes why people aren't as excited about FHA and VA borrowers. However, this is a small detail that rarely matters and far too over considered in my humble opinion. 

What Happens if Your Home Appraisals for More Than the Sale Price?

The truth is that you will never know. You did not pay for the appraisal because the buyer needed it for THEIR loan. So, yes, it's your home, but you are not privy to this info. You typically only get this info when it appraises for LESS than the agreed upon sale price. It's ok. It doesn't change anything. Your goal was to sell the home and for the buyer to get a loan for the agreed upon amount. Everything else is unimportant (even if you are dying to know!)

Remember your Realtor, assuming they are experienced and know what they are doing, has done the same job as the appraiser. This is why we pull data when you hire us to list your home. Not only are we trying to determine market value, but we are also trying to help you have an appraisal issue. 

It's not that the appraiser and the Realtor(s) come up with the exact same data. We don't always. But, Realtors are trained on how to get close and we do our best to avoid these conflicts as much as we can. We are not appraisers in most case. However, there are a few people that do both careers!

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