The dreaded appraisal. The sellers pray that the home isn’t worth less and the buyers pray that the home is worth more. On either side of the transaction, the appraisal can often be a stressful and halt transaction. Read more to find out exactly why.
Welcome back to another exciting Real Estate blog on Loving Charleston Life! I am Chris Tertzagian and I am serving the amazing people of Charleston, SC!
Today we are talking about Appraisals. I have been on all sides of the transaction with regards to appraisals. I have celebrated instant equity with Buyers when in comes in high and fought to find the value with Sellers when it has come in low.
The Appraisal Process
○ If you (or your buyer) are getting a loan to buy your house, the bank will
send an appraiser. The appraisers sole purpose is to protect the bank’s investment in your home. The bank wants to know that the buyer isn’t overpaying, so if the buyer ever defaults on the loan, the bank can foreclose on the home and recover its investment.
○ To determine the home’s value, the bank’s appraiser will compare properties, similar to yours, that have recently sold in your neighborhood. These are called comparables, or “comps” for short.
○ In addition to comps, the appraiser will also consider things like the home’s condition, age, and size to determine its value.
○ Once the value has been determined, you’ll receive an appraisal packet with all of the details.
Four Main Components of an Appraisal
○ #1 A complete walk-through
■ The bank’s appraiser will walk through the entire house to get an idea of the overall condition. They’ll also confirm the tax records and note any upgrades done to the home
○ #2 Home Details
■ After the appraiser complete’s the walkthrough, they’ll compile all the details of the house into their appraisal software. They’ll enter important details like square footage, room count, bathroom count, and measurements.
○ #3 – Comparables
■ The appraiser will find comparable homes that have sold recently in the area. They’ll note all of the similarities to your home and include pictures from the MLS.
○ #4 – The Evaluation
■ The most important part of the appraisal packet is the evaluation. This evaluation is the amount that the appraiser deems the home is worth. This dollar amount will be sent to the bank, the buyer, and the seller so all parties know how much the
bank is willing to lend.
The Consequences of Not Having a Good Agent
If you’re selling a home and the appraisal comes back low, the buyer will probably demand that you lower the price – which means less money in your pocket. This is why it’s so important to have a great real estate agent on your side. A good Realtor® can price the home correctly to begin with and communicate the value to the appraiser throughout the appraisal process.
First and foremost, it is crucial to develop a relationship with the appraiser. As a listing agent, I reach out to the appraiser once they have schedule the appointment to evaluate the house. I always provide my comparables. I even go as far to research the tax records in case there are sales that are not in the MLS so I can give the appraiser good information to find the value in my listing. Also, knowing how to read an appraisal is important. I have found mistakes on appraisal reports that effected the value and was able to get the house to appraise for contract price.
At this point, you may be convinced that you may need some guidance around the area of appraisals. But you may also be thinking that you have no idea where to start.
If you’re thinking about making a move, I can help you through the process. Just send me a message or text me at 843.270.9399. No pressure, no sales tactics, just the help and guidance that you need!