How to Understand a Home Appraisal
A home appraisal plays a central role in determining the value of your home from the buyer’s or market’s perspective. For this reason, a lot of homeowners are often shocked when they find out that their home isn’t worth what they thought - more on this below.
One of the reasons home sellers are often disappointed in their home’s value is that they do not understand what is involved in a home appraisal and how appraisers calculate the final number.
When you know what your home is really worth, you can create a strategy for determining the selling price and how you will negotiate a deal. You can also decide if you want to sell your house on the market or directly to a buyer for cash.
What Is a Home Appraisal?
A professional home appraisal is an objective assessment of a home’s market or resale value from the market’s perspective. In a home sale, you can use an appraisal to determine how much you want to sell your home for. Keep in mind that you do not have to sell the home for the appraised value. You can sell your house for more or less.
Something else to remember is that appraisals are supposed to unbiased and objective. As such, you should always hire a third party to conduct the appraisal when selling a party. The appraiser should use a proven set of criteria to determine the home’s worth and provide that information to you upon request.
How Is a Home Appraised?
There are several factors that determine a home’s value.
- Location
- Recommended repairs or upgrades
- Comparable property values in the neighborhood
- Additional or unique home features
- Current marketing trends
- Number of bedrooms and bathrooms
- Floorplan functionality
- Square footage
A qualified appraiser should be licensed or certified—as required in all 50 states—and be familiar with the local area. The appraiser must be impartial and have no direct or indirect interest in the transaction. This is why it is important to hire a third-party appraiser.
The Home Appraisal Report
Appraisers use a uniform residential appraisal report when performing an appraisal. The appraiser describes the interior and exterior of the property, the neighborhood, and nearby comparable sales. The appraiser also provides an analysis and conclusions about the property's value based on their observations.
The appraisal report must include:
- A street map showing the appraised property and comparable house sales
- An exterior building sketch
- An explanation of how they calculated the square footage
- Photographs of the home’s front, back, and street scene
- Front exterior photographs of each comparable property used
- Market sales data
- Public land records
- Public tax records
- The property's fair market value
Can I Challenge a Home Appraisal?
Yes. Home sellers challenge professional home appraisals all the time. If you feel that an appraisal is inaccurate or that it is keeping you from selling your home, there are some things you can do.
Set Your Selling Price (And Defend It)
If you do not agree with the appraisal, you can simply set your home’s selling price and negotiate as you go. However, your response to the appraiser’s report should not be an emotional one. Instead, you need to carefully think through your selling price and be prepared to defend to prospective buyers.
Challenge the Appraiser
Appraisers can make mistakes or have imperfect information, and appraisals can be affected by bias. You can also try presenting a factual case for a higher value to the original appraiser. They may agree with you and revise the evaluation.
Sell Your House As-Is for Cash Off the Market
Another option for selling your house is to bypass the appraisal and the market altogether. Look for a company that buys houses and negotiate a deal to sell your house as-is for cash. In a cash sale, you don’t have to worry about issues that keep you from selling your house the traditional way. You simply negotiate directly with the buyer in a private transaction.
Get a Fair Cash Offer from Local Guy Buys Houses
Selling your house in 2022? Local Guy Buys Houses can help you save time and money by paying cash for your house and buying it as-is. Call 855-205-5999 to get a fast cash offer.