Most of the time, when selling your house, you can anticipate that there will be an appraisal. The vast majority of the time, mortgage lenders require the home to be professionally appraised before they sign off on the loan… so unless your buyer is paying in cash, you’re probably going to need to have the place appraised.
The timing can vary, but it’s usually in the period between the acceptance of the buyer’s offer, and the final closing date. In other words, the appraisal will probably happen in roughly the same window as the inspection, though these two steps in the real estate transaction are distinct from one another.
As you try to get your home sold, it’s important to be mindful of the pending appraisal and all its implications. In this post, we’ll outline roughly what the appraisal is and what you can expect from it.
As a quick reminder, we’ll also encourage you to claim your free seller’s report from SOLD.com, which will outline some additional guidelines for successfully selling your house. Request your report now!
With that said, let’s dig into the home appraisal process.
Understanding Home Appraisals
When you get a home appraisal, what you’re getting is an unbiased, independent assessment of the home’s true value.
Again, this is not an inspection; the appraiser will not be meticulously inspecting each and every household system or making repair recommendations.
Instead, they’ll spend a few minutes surveying the home, walking through each room, potentially making a few notes, and determining roughly how much the home is worth. Their goal, basically, is to ensure that the agreed upon sale price is accurate and fair.
You can probably imagine why appraisals are done: The bank wants to protect its investment, ensuring that they are not underwriting money for a home that’s frankly not worth it. In a worst-case scenario, the bank wants to recover as much of their investment as they can, and that’s not possible if they sink more money into the home than it could ever be worth. To put it differently, the appraisal is designed to prevent the homebuyer from overborrowing.
How the Appraisal Process Works
As a seller, you do not have to arrange for, or provide, the appraisal. The lender will arrange it, hiring an appraiser who is licensed in the state. It is legally required that the appraiser be someone totally independent… that is, it can’t be an employee of the bank that’s underwriting the loan! The appraiser must also confirm that he or she has experience appraising homes in the local geographic area.
The appraiser’s inspection will be purely visual, and you don’t need to worry about them doing anything “invasive” to any part of your home. The appraiser’s valuation of the home will be based on recent home sales in the area, as well as on the square footage, the amenities, and the general state of repair in which you’ve kept your house.
The appraiser will generate a thorough report that outlines exactly how they arrive at their final conclusion.
Will an Appraisal Make it Harder for You to Get Your Home Sold?
In an ideal world, the appraisal will simply confirm the sale price of your home.
The worst-case-scenario for buyers is that the house appraises for quite a bit less than what you’re asking for. If this happens, your only real option is to lower your sale price to align with that appraisal. You can hold out for a cash buyer who will pay what you want, and not ask for an appraisal… but that’s a remote possibility.
This underscores the importance of pricing your home fairly and correctly the first time around. Don’t ask for more than the home is truly worth, as it will likely just lead to complications down the line… and also make it that much more difficult for you to find a buyer in the first place.
Find Out More About the Best Way to Sell a House
As you think about the best way to sell a house, from pricing to staging, we encourage you once again to request a FREE seller’s report from SOLD.com. Claim yours today!