Property appraisal is carried out by the purchaser’s lender during escrow. The goal of this process is to ensure the payment that buyers make for the home matches its worth. This is essential when purchasers are to buy the property using borrowed money in the form of mortgage. The appraisal is the investor’s security net to clasp over-inflated market values and a way to recover their losses if the property-owners go into foreclosure. In this instance, we are talking about the idea that the SELLER commissions a pre- appraisal listing. The goal of commissioning a pre-appraisal is to protect the interests of the seller.
📝 Why Get a Pre-Appraisal Before Listing?
Pricing your home is the toughest task any one can do because to the emotional attachment. At some point, you might feel that the market price does not value your home, making it hard to secure a buyer. The pre-appraisal will help you price your home based on the market price. The following factors demonstrate why the pre-appraisal process is necessary before listing.
Like a real estate agent, a certified real estate appraiser is highly respected in the industry. The worth of your home can easily turn into mortgage loan fraud. For that reason, appraisers must be on target on the figure that they set on a home. Because of this fact they are conversant with both mortgage and real estate laws.
Seasoned real estate agents are good at analyzing real estate data, but at times there is no data to be analyzed depending on the property’s location. This is the perfect reason to hire a specialized real estate appraiser. In this scenario, a seller will have an objective “opinion value” which will be helpful in future discussions.
It is difficult for a buyer to form a dispute against the value offered by an expert whose work is accepted by the buyer’s mortgage company. In a situation where the real estate agent and the vender disagree on a price, a trained appraisal should offer the seller total reassurance and confidence that their property is well priced.
TIP: To develop an objective “opinion value,” hire an appraiser who is not a family member or a friend.
- Reality Check
Many sellers perceive their homes to be of more value than they are at the time. Having an unbiased and objective idea of value is what every seller requires to accept the truth.
- You Have Back Up
Just like anyone else, an evaluator is prone to making mistakes. It would be good to have something to compare to if the purchaser’s evaluation came in low. Such an instance can occur if Appraiser B missed a transaction that could impact on the total value either bad or good.
- True Size
A pre-appraisal from a certified expert will give you the genuine amount of square feet of the property. Many of us are occasionally embarrassed for not only thinking that our homes are of higher value but also that they are bigger than they really are. An evaluator will physically measure the house to offer the correct size for the purposes of setting the right fee for each square foot.
- A Selling Tool
With a summarized version of the report from your pre-appraisal laid out for buyers to view during shows, potential buyers will have confidence in the buying price. This could stop low-ball offers.
- Improvement Ideas
An appraisal can be important in pointing out places around your home that require renovation, potentially adding more value to your property. Spending a few dollars now can give you a huge turnover down the road; make some suggested developments, give your home time to appreciate, and then sell it at a higher cost.
Again, for your home to reach a target amount, the appraiser might need you to complete some repairs on your house. Completing an appraisal before listing offers you extra time to compare repair expenses and to get the job done, as opposed to having this demand originate from the purchaser’s judgement.
⭐️ What is a Pre-Appraisal?
Basically, pre- appraisal refers to an estimation or assessment of the worth of the property or an item. Usually pre-appraisal is for the home owner’s personal use. It helps an individual in deciding on the price to put on the home. It creates awareness of the repairs that an individual is supposed to do to increase the value of the property. When the assessors visit your home, they will start their evaluation from the outside. They will check on how the building has aged, the state of the fixtures, and the value of landscaping. Inside, the appraisers look on the flooring, ruined walls and other stuffs that seem to be in disarray or despair. The appraiser focuses on factors such as the square footage of the home, amenities, upgrades, and the market area among other factors.
Also, pre-appraisal might serve as a marketing tool during showings to validate one’s prices. Nevertheless, that evaluation benefits no one else other than you. Consumers may view your listing appraisal as fabricated or biased. Therefore, be aware that if you opt to have pre-appraisal prior to listing, you will still have to welcome another evaluator on behalf of the lender.
📋 What is the Process of a Pre-Appraisal?
The process of a pre-appraisal can be challenging if it is not approached in a professional manner. In this case, for an individual to start this process they need an appraiser. The appraiser plays a critical role in helping you set up the date when the pre-appraisal will take place. Importantly, they guide you through the four main steps of the process. The steps include:
- Defining the problem
- Preliminary inspection and planning the work
- Collecting data and analysis of the collected data
- Applying the cost approach
What does this mean? It means that the appraiser collects sales data in the market and uses that data to compare statistics with your home. They will collect sales data of properties that are like yours in terms of square footage, location, and amenities. An appraiser has a right to come to your home and inspect the property before the process. In the case that they find that some repairs are needed you might have to take time to make them. If you fail to make the repairs there are high chances that the buyers will notice them, and they will use that to their advantage when negotiating for the price. Therefore, it is for your best interests to fix the repairs as identified by the appraiser. The appraiser comes up with a report that will be given to you once complete. This report is important in many ways since you will have something to show prospective buyers, hence adding credibility to whatever price you are selling your home. As demonstrated the four steps are crucial in defining the pre-appraisal process.
👤 How to Choose an Appraiser
The purpose of ordering a pre-appraisal is to ensure that, as a seller, you get value for your home. Getting the right appraiser will help you achieve this goal. To make up the appraisal of your home there are several factors that one has to consider and getting an experienced appraiser will be a plus for you as the seller. The appraisers are not only critical in the whole process, but they also have a solid understanding of your market. By inspecting your home, they can tell you what to expect and if there is anything you can do to ensure you get a better deal in terms of pricing your home. However, it can be a challenge to get a reputable appraiser if it is your first time since it is something you never had to deal with before. In this case, there are several factors you must consider when looking for the best appraiser.
- Go for a Residential Appraisal Specialist. – There are different specializations when it comes to appraisers based on the types of appraisals. In this case, you need to go with someone who is area of specialization is in residential appraisals. There is no way you can choose an appraiser whose area of specialty is appraising other types of dwelling and expect to get the best results. Therefore, understanding different types of specialties in the market is critical in finding the perfect appraiser.
- How do I know the appraisers in my area? This is one of the questions that you might find yourself asking. This question can easily be answered by your real estate agent. The fact that real estate agents work hand in hand with appraisers gives them an upper hand in knowing the best appraisers in your area. A referral from your real estate agent can be the best choice considering that they might have worked together previously hence they understand the behavior.
- It is important to interview a good number of appraisers. – Never go with the first person you meet just because they are at the top of your call list. Interviewing different appraisers will give you an opportunity to get an appraiser that you are more comfortable with hence, a good working relation. Talking to different appraisers will make it easy for to determine the one with the most experience and choose the one you feel is the best suit to handle your task. Do not forget to ask about appraisers’ licenses, certifications, training as well as their prices since you will have to choose the most qualified one but also who is within your budget.
- Confirm their license and certification. – After settling for the appraiser that you will use on your pre-appraisal; it is important to confirm their license and certification. It will cost you nothing to search their name in the Appraisal Subcommittee’s National Registry to confirm their details of the appraisers of your choice before the work. The fact that their services are a deal breaker; it is important to confirm these details because they can mean you losing or making money.
🙋♂️ How Can a Real Estate Agent Help?
If you think that your real estate agent has no role in an appraisal process, you are wrong. Because agents work regularly with appraisers, they can refer you to a reputable appraiser. The real estate agents can also help you in understanding the type of license certification and training an experienced appraiser should have. A home is a type of investment that you would not want to joke with by getting an appraiser for the sake of getting one since the type of appraiser you get could mean a bad or good appraisal. The best resource when researching on the best appraiser is your real estate agent.
It is the hope of every homeowner that their home appraises on the high side after an assessment by the appraiser. Any one that listens to their real estate agents stands a better chance of getting a better deal. This is because real estate agents have exposure to different homes in the area, and they can advise you on the necessary changes that you might need to make to add a value of your home. They will give your reasons to worry about the small repairs because they understand that buyers use the things we view as little to the advantage. They know that an appraiser will take note of everything and add them up therefore, affecting the value of your home.
Staging your home for the appraisal might be a challenge because you never done it before. However, with a real estate agent; it will be easy for you considering they have experience on the same. For instance, a real estate agent can advise you to rearrange a room by doing away with some things like unwanted furniture. This simple touch can add value to your home because it will make your home look spacious something many buyers are looking for. When you are selling your home, you need to do a lot of work to make sure it is appealing, little advice from your agent will help you achieve your goal.
The real estate agent will help you when it comes to pricing, considering that they deal with properties and value assessments daily. The goal when selling your home is to bring in the best return on your investment, so consulting people who have the experience in this field is an advantage. There is no one with richer experience than your real estate agent.