If you are selling your home with OR without a real estate agent, you should get an appraisal before deciding on the sale price. A broker’s market analysis will put you in the ballpark, but do you really want to stumble around in the dark with your hard-earned capital? I remember a retired couple who set their selling price based on the agent’s analysis. Your house sold in three days! When the appraisal came in, it was $20,000 above the asking price. It was a terrible shame, but it can be just as bad if you price it too high and it just sits on the market. An initial appraisal will protect your capital and be worth the cost.
Having an idea of what a property appraisal entails can go a long way in maximizing the appraised value. The following main steps are in the sequence normally followed by appraisers:
1. Research the subject property for size, bedrooms, bathrooms, year built, lot size, and square footage.
2. Collect recent sales data in the neighborhood. The appraiser needs to locate at least 3 houses of a similar size that have sold in the neighborhood in the last six months. Homes must also be within one mile of the subject property. These houses are called “Comparable Properties” or “Coms” for short.
3. The field inspection consists of two parts: a complete inspection of the subject property and the exterior inspection of comparable properties.
The inspection of the subject property consists of taking photographs of the street scene, the front and the back of the house, which may include parts of the garden. The appraiser will do an interior inspection to see if it is in good condition, noting any items that detract or add to the value of your home. He will also draw a floor plan of the house while doing the inspection.
Inspection of comparable properties is limited to an exterior inspection. For features that cannot be seen from the street, the assessor uses: Multiple Listing Services (MLS) reports, California Market Data Cooperative (CMDC), county public records, and appraisal files to help determine the condition.
4. After the field inspection has been completed, the appraiser must determine which comparable properties most closely resemble the subject. He/she then makes slight adjustments to the value for any difference. After making any necessary adjustments, the appraiser must go through a reconciliation process with the three comparable properties to determine a final estimated value for the subject property. This method is called the “Direct Sales Value Comparison Approach” and takes into account almost all considerations in determining the value of a single-family property.
It is important to remember that the appraiser will take photos of the street scene and the front and back of the house. The street scene gives lenders some sort of idea about the type of neighborhood the house is in. The photo of the front of the house gives the lender an idea of its condition and curb appeal. Lastly, the photo of the back of the house and part of the backyard is another indicator to the lender of the care and maintenance of the house.
In most cases (over 90% of the time) what you see on the outside of a house will be almost exactly repeated on the inside. So one of the most important things you can do to improve value or perceived value is to improve the curb appeal of your home…and don’t forget to clean up your backyard.
An appraiser will call ahead to schedule an appointment to inspect your home. At that time offer to provide any information about the size of the house, number of bedrooms, bathrooms, pool, enclosed yard, etc. The more that is known about the property before the inspection, the better the appraiser can focus on researching the most similar comparable. Doing your homework will maximize your chances of getting a good appraisal.
While your home is being inspected, don’t follow the appraiser from room to room causing a distraction. Instead, let the inspection go smoothly. In case the appraiser has any questions, be nearby to answer them. The time to mention the things you think are important is before or right after the inspection.
In conclusion, the best thing you can do to increase the perceived value of your home is to get it listed before the appraisal. Clean it up, put fresh paint where needed, and remove clutter inside and out. You should also do any minor repairs needed and be sure to spruce up the front and back yards!