by Brad Pauly
on Wednesday, February 20th, 2013 at 4:02pm.
Everyone has heard a story about how a deal fell apart because of a low appraisal. Whether you are selling your home or refinancing, you are going to have to face that moment of truth when the appraiser tells you what the bank thinks your home is worth.
Fortunately for us here in Austin our market is smoking hot and lots of homes are trading at good prices, but even this can sometimes be a problem when the prices are going up faster than the comps are collecting. And sometimes you get bidding wars and end up with a sales price that outstrips the loan capacity.
That’s why you need to be ready for the appraiser when the time comes. In the end, the appraiser is going to make a decision on what your home is worth based on what it has, how it looks and how it compares to others that have sold in your area recently. Your home needs to be in “beauty pageant” mode if you want the best numbers.
Here are a few things to consider if you want to see a better appraisal value and just skip those headaches.
Most people are familiar with this term as it relates to how a prospective buyer views your home from the street, but appraiser are people too and are affected by this “First Impression” just like anyone else. You don’t really have to spend a bunch of money on this one, although you certainly can. Just doing the basics can make a big difference, like general landscaping upkeep. Clear away any debris and dead plants, trim the bushes, lay down fresh mulch and green it up as much as you can. Make it look "alive."
CUT THE CLUTTER
A busy home can lead an appraiser to think you don’t have time to properly maintain the house. Pay particular attention to Kitchens and Bathrooms, if there are many items that get used regularly, put them away into cabinets and drawers leaving behind only decorative touches. We are aiming for that “Model Home” look, something that makes you think Style not Function.
SCRUB IT DOWN
While this may seem like an obvious statement, many people are busy with their day to day work and activities. This one is a free throw and you can score big with a fresh smelling, clean house. A clean house is a desirable house.
SPEND WHAT YOU CAN
This pertains mostly to those of you looking to sell your home, buyers and appraisers are looking for something that is up with current trends and not so dated. Start with the less expensive and work your way up to get the most bang for your buck.
Paint the walls a fresh neutral color. For the price of a few cans of paint and some of your spare time you can actually add value to your home.
Replace those old faucets. You are used to looking at those faucets from the 80s, but buyers and inspectors see the chrome bubbling off. You are going to like looking at new faucets too.
Replace that old Vinyl flooring. Vinyl flooring screams “dated!” Get into DIY mode and put down some tile, wood flooring or laminate, whatever you can budget for. This will make a huge difference in how new the home feels.
Update countertops. Laminate counters are now considered low-quality. Try installing solid surface material, or even better, granite. You will be surprised at how much the price has come down on stone counters and what a great marketing value new counters can have.
As you tour your home deciding what changes to make, keep an eye out for maintenance problems such as torn window screens, dripping faucets, running toilets, missing trim and broken door handles. These should be fixed prior to the appraiser’s arrival.
MAKE AN INFORMATION PACKET
The appraiser is going to have access to most of this information on his own, but mistakes can be made so you want to limit your chances of a lower appraisal due to an error. A couple of neat typewritten pages in a folder should be fine, here are a few things that can be good to include. Comparables - The appraiser is going to look up his own list of Comps but there is nothing wrong with giving him a few more to consider, plus you may know a little bit more about the reasons for these sales. Maybe that house down the street sold low because the owner took a new job out of state and had to sell fast, or if it was an Estate sale.
“brag sheet” – Sometimes the information available to the appraiser is in error, just one such error can affect your home’s value drastically. The appraiser will refer to your “brag sheet” when preparing your appraisal, so give him these basics.
Exact street address
Number of bedrooms
Number of bathrooms
Add the square footage if you like, although the appraiser will measure the home.
Next, list out all of the major repairs and installations you have done recently. Include their cost and the contractor’s information if you have this. You will want to list out things like:
Replacement of the home’s major systems, such as heating and air-conditioning
Upgraded electric or plumbing
This packet can give your appraiser accurate, detailed information to refer to as he/she prepares the report for the bank.
Being prepared can help maximize your home’s value in the eyes of the appraiser, and in this case that is what matters most. Your Realtor can be a great source for ideas and suggestions to help you get the best value for your home as they encounter these situations on a regular basis.