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Lenders require appraisals to ensure that a property’s value exceeds the loan amount. The lender wants to make sure it can recover its loan by selling the property if you default on loan payments.
Lenders often have appraisers on staff, but they can also use independent appraisers. In either case, the appraiser must meet state standards and licensing practices. An appraiser should have no financial interest in the property value to ensure a fair assessment.
People often confuse an appraisal with a home inspection. While appraisers “work” for the lender, a home inspection–according to the American Society of Home Inspectors–gives the buyer “an objective visual examination of the physical structure and systems of a house.” Buyers should not use an appraisal in lieu of a home inspection–though appraisers will note any major damage to a home. Appraisers do not check electrical systems, appliances, the roof or other important aspects of a home.
 Appraisers usually determine the value of a home by evaluating the sale prices of similar homes in the area. The property being appraised is called the “subject property,” and the properties used for the appraisal are called “comparables” or “comps.” Appraisers do not use a specific formula to determine property value.
A residential appraisal report will include details about the subject property, comparisons to three similar properties, factors that may threaten the property’s value, physical problems with the property, and the estimated sales time for the property.
Use this link to view a Sample Residential Appraisal Report.
How to Deal with a Low Appraisal
Sample Uniform Residential Appraisal Report–pdf
Uniform Residential Appraisal Report (Form 1004) –pdf
You may be considering selling your home, remodeling, borrowing against your equity, or calculating your estate’s value. There are many reasons for needing to know your property value.
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I will provide you a free home valuation to begin your selling process. While I am not a professional appraiser, my research will give you a good estimate based on the recent sale of similar homes in your area. Click Free Home Valuation to get started.
If you want to hire a professional, you can call an independent appraiser. This will likely cost a few hundred dollars, but if you are weighing a big financial decision–like purchasing a second home or building an addition–you may find it worth the money.
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Sample Property Value Report
Sample Home Price Report
Because newly listed homes get the most attention, it is important to price your property correctly at the beginning. A good first step is to request a CMA from several real estate agents. With these estimates, you can compare your home to homes similar in style, age, size, locations, and amenities.
Sellers often make the mistake of over emphasizing their needs. Buyers do not care about your sentimental memories, your timeline for selling, what the house is worth to you, or how great you think your house is. Remember that buyers want the best home for their money. However impressive your home may be, buyers are comparing it to homes of equal grandeur and quality.
The biggest barrier to selling a home is often a seller’s inflated perception of the home’s value. Whether your goal is to make the most money possible or to move into your new home quickly, waiting around for the right buyer can lead to a stale property. Research to understand the current real estate market and your home’s fair market value. Then price accordingly.
You may also consider using a range when pricing your home. This can appeal to buyers’ optimism and entice them to bid on homes they would otherwise overlook. Equally helpful, range listings show up in a broader spectrum of MLS searches and are thus captured by more queries. This is a new strategy, so ask your agent if it would be effective for your home.
What Price Would You Take For Your Home?
Don’t Let an Over-priced Home Be a Humbling Lesson
Selling Using a Range May Bring Top Dollar
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Ph: (704) 367-3759
Cell: (704) 577-5726
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