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My House is Being Appraised. What Can I Anticipate?
Your realtor or lender told you to plan
on getting a call from the appraiser. They’d need
to set up an appointment when they could come over and
appraise your home. Don’t panic. This isn’t
a final exam and you don’t need to dread this visit.
She (or he) will be there to determine the value of
your home, not to look at or in your stuff. They will
be looking in all rooms on all levels as well as your
outside property. They will measure boundaries and take
photographs. Appraisers have seen everything so you
need not scurry around tossing things in closets and
under the beds as you would if your in-laws were coming
over.
Whether you’re selling your home
or refinancing, the process is the same (in most cases).
The appraiser’s job is to determine market value
of your home so that your lender knows the home is valued
at or above the amount of money you are borrowing. An
appraisal is basically an opinion of value, an estimate
of worth. It’s not entirely a subjective process.
The FNMA, Federal National Mortgage Association sets
up the guidelines and assigns values to certain assets
of your home to ensure a fair sale.
The value of a residential home is estimated
by comparing the property with similar properties that
have been sold recently. This is commonly referred to
as “Comps”. “We need to look at comps”.
They start by looking at your neighborhood to find comparable
sales or properties in similar neighborhoods that share
similar characteristics of lifestyles, income level
of residents, surroundings, average age and home values.
If your home is a 3 bedroom ranch with 1.5 bathrooms,
attached garage situation on ½ acre of land,
the appraiser will try to find a similar property in
a nearby neighborhood or same school district. They
will need to find three or more homes that recently
sold homes with similar characteristics for a valid
appraisal.
Once they find the comps, some adjustments
will need to be made. The other homes likely had some
features yours didn’t, or vice versa. The comparable
properties are adjusted (added onto or subtracted).
By doing it this way, your house reveals more value
when compared to a comparable house with lacking items
(such as no fireplace or central air).
There are basically four phases the
appraiser will use in determining market value for your
home. They start by listing and evaluating home value
data from your property and potential comps. Then they
need to go through and determine which items are comparable.
Do their adjustments, and rework the figures to your
property.
They also have assigned values on areas
to use when finding comparable properties. The first
area they look at is similar neighborhood. Then they
look at living space, numbers of rooms, and sales within
the last four months. There are a number of other factors
they consider, but it is very methodical and universal.
You can plan on spending $120 to $350
for a qualified appraiser. Often your lender will have
a particular company they generally work with. If you
would prefer a particular appraiser or appraisal company,
just let your lender know that you want it done through
that particular service.
Relax, don’t worry. Selling and
refinancing a home can be nerve-racking enough. Don’t
stress over the appraiser’s visit. You can’t
schmooze them into higher values and they’re not
going to trash your appraisal because they didn’t
care for your choice in wallpaper!
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