How To Get The Most Out Of Your Home Appraisal?
Whether you are selling your home or refinancing your current mortgage, getting a home appraisal is a necessary step within both processes.
The experience of getting a home appraisal requires that you relinquish some control over your property by letting a licensed professional determine the value of the home. It doesn't matter if the property is your primary residence or an investment property; you should be planning to do your best to make sure you get the highest appraisal possible.
To ensure that you get the most out of your home appraisal, you should gather an independent list of comparable properties recently sold within the area using the Multiple Listing Service (MLS) or Zillow. This list should include the price at which the properties were sold and key features that drive up a property's value, such as the number of bedrooms.
Having the ability to do your own independent research on comparable properties within the area is crucial to maximizing your home appraisal.
Not only does this element of the due diligence process showcase where your property currently stands compared to similar properties in the market, but it also identifies features on and within your property that can be improved to maximize the appraised value.
Even though this is one of the most important steps, it isn't the only thing you should consider when preparing for a home appraisal.
What Exactly Does The Home Appraiser Do To Your Property?
To prepare for your home appraisal, you must first understand how licensed home appraisers obtain the value of homes.
Home appraisers are tasked with identifying the value of a property on the open market. They typically start their appraisal process by compiling a thorough list of comparable properties recently sold within a market.
In the real estate world, this process is called “Finding Comps.”
The appraiser isn't just comparing the price at which a home is sold for within a giving market, but a multitude of property features related to the structure, condition, size, and the surrounding area of the property to accurately value where your property stands compared to other properties within the market.
This list showcases the top features home appraisers are looking for to calculate the value of your home:
Number Bedrooms and Bathrooms
Property's Square Footage
Roof and Foundation Quality
Remodels & Updates
Additional Space such as Basements and Attics
If you haven't noticed yet, this is the exact same process that you should also do independently from the home appraiser.
Hopefully, you consider the features from the list above when you are attempting to estimate the value of your home. If you do a good job finding comparable properties, your estimated value of the property should come close to the actual appraised value.
It is also good practice to give your home appraiser your list of comparable properties when they come to appraise the value of your property. Even though they may not use the comparables you have given them to find your property's value, you can ensure that you do not miss any of the relevant comparables they need to do their job correctly.
What To Do In Preparation For Your Home Appraisal?
Now that you understand exactly what a home appraiser is tasked to do, here are the tangible things that you can do before the home appraiser arrives.
1. Gather a List of Comparable Properties
Compiling a list of comparable properties is how you will get the most out of your home appraisal!
As stated before, this is the same process that your home appraiser will conduct to identify your property's value. Therefore, it only makes sense that you conduct your own process of finding comparable properties to gauge the property's value for yourself.
It is best to utilize the multiple listing service (MLS) for the most accurate information related to the previous listing within a given market. This will be the same data that the home appraiser uses to appraise your property.
However, you may not have access to this information unless you are a real estate agent or know someone who is a real estate agent who is willing to help you find comparable properties.
If you don't have access to the MLS, using Zillow or Trulia would suffice as a substitute; however, both tools cannot guarantee 100% accurate information. You should not be surprised if you find out that the Zillow listing for a home recently sold in your area was $15,000 more than what it actually sold for on the MLS.
2. Identify Areas That Add The Most Value To Your Property
It is common knowledge in real estate that the most efficient way to add value to your property is by adding additional bedrooms or bathrooms.
However, if you are on a budget and not trying to add any additional rooms to the property, you should definitely consider updating or remodeling the kitchen or existing bathrooms.
Quality material and an updated look for a kitchen or bathroom will drive up the value to just about any property; therefore, you should start there.
3. Document Past Rehabs You Completed On The Property
Apart from being a homeowner and an investor, you can be organized or hire someone to organize your life for you.
It is a best practice to keep track of any past rehabs or updates made to the property since you acquired it. It helps to save past receipts and track past rehabs and renovations on a platform like Google Drive.
Whether you have lived in the property for 5 to 10 years or if it is an investment property that you own, it's very important in any situation that you have the appropriate documentation of all the things that have been fixed since you have owned the property.
The home appraiser will likely ask you if the property has had any updates or renovations since you brought it, and they will like to see actual documentation of what has been done on the property.
This is the time to highlight the new heating and cooling system you just added a year ago or the foundational problems you fixed a while back. Properly documenting these measures and highlighting them to the home appraiser will ensure you maximize the appraised value of the home.
4. Clean Up Your Property
This is a very simple concept, but sometimes investors tend to forget that appraisers are real people.
They are trying to do their job as objectively as possible, but that is hard to do if the place is not clean. If the place is cluttered with junk over the floors or the place smells horrible from two-week-old takeout, it may negatively affect your home appraisal.
Both the inside and outside of the property should be presented in the best possible way. The grass and hedges should be cut while the floors and walls should be wiped. You should be willing to do all of these small basic tasks to impress the home appraisal before they arrive.
Some investors and appraisers say that appraisers don't base a home's value on the home's cleanliness but simply based on features. However, if you are trying to ensure you get the highest appraisal possible, it's best to be safe than sorry and make sure that either you clean the property before the appraiser gets there or you hire someone else to do it for you.
Also, Don't Micromanage the Home Appraiser.
If you are a little anxious the day of the appraisal, that is okay, but please do not micromanage the home appraiser.
Just like most of the workforce in America, no one likes to be micromanaged.
Therefore, it's probably best to either wait outside or just wait in another room as the appraiser inspects the entire home. I know this may be difficult because you want the point at all of the home's newest features; however, this may only frustrate the appraiser and have more of a negative effect on your appraisal than a positive one.
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