How to Avoid a Low Appraisal
Almost 10% of Appraisals are Too Low
Usually, if you find the right real estate agent, you should be in pretty good hands when selling your home. But we have seen as many as 1 out of 10 appraisals come back below the negotiated purchase price.
First of all, appraisers are not magicians, even though there are many bad ones that try to act like it. The reputable appraisers have a respected opinion which can draw upon a bag of tricks as long as there’s a legitimate basis for their use. If not, lenders will see through the smoke and mirrors and stop doing business with them.
Avoiding a Low Real Estate Appraisal
Here are some common steps that may help positively influence an appraiser’s opinion and allow them to perform a few tricks when determining your property’s value:
1. Meet the Appraiser
While you can’t charm your way to a major bump in value, adding a face to the property can help a little (as with any transaction). So don’t schedule an appointment and offer lock box entry for when you’re not there. It’s best to meet the appraiser and escort them through the house. Give them a personalized tour and throw in a little personal flare and story, but do so without boring them.
2. Do Some Research
Believe it, many appraisers do appreciate it when you can hand them a single page itemized list of updates and their approximate cost, as well as a short list of any comparable properties that have sold recently, They will thank you for making their job easier. And if you can, point out particular upgrades that area properties are known to be lacking.
3. Fix it Felix
What does this mean? It means that you don’t want your property to show signs of being distressed. Whether it’s curb appeal or interior design, when an appraiser visits your home, it will matter if the walls are stained and moldy, or the yard has more patches of sand than blades of grass. So dress up your house (something a good real estate agent would have encouraged you to do before listing it). Never leave ceiling leaks, cracks and holes in plain sight. Greater profits are realized when performing the work in advance. Property values are often discounted for much more than the actual cost of imagined repairs or improvements.
There’s nothing worse than an appraiser having to make note of a problem with the property like a hole in the ceiling from apparent water damage. Not only will your value take a hit, but most lenders don’t like to lend money on a property that is subject to any type of conditions – seemingly minor problems may kill a sale if it’s contingent on financing.
Even the simple things like a fresh coat of paint, window accents, and colorful flowers with new mulch can influence an appraiser’s opinion. This doesn’t guarantee a huge windfall, but a few bumps of a thousand here and there can quickly add up to 5 figure adjustments.
4. Know Your Ups and Downs
This is a very simple and often overlooked concept: If your local real estate market has seasonal ups and downs, avoid listing your home or ordering an appraisal until the market has been active for a month or two. Appraisers rely heavily on area sales comparables and if you’re in the slow season, it may negatively affect your value because there will be fewer homes to compare it against. Lenders like to go back 3 months. Otherwise, values can often suffer when comparable sales are 6 months or more behind. The same concept applies to properties located far away as lenders are more comfortable when comps are close by.