As a seller, you just picked out the short straw. From here on until closing the deal, you are going to be on a bumpy ride, with buyers negotiating with you to accept their offer. You finally put the house up for sale on the market and got multiple offers. Now, you need to go through the dreaded process of an appraisal.
An appraisal allows you to set the right sale price for your house, or does it? Think about it, just because a person said he’s been in the real estate market for a decade, you will put your house’s fate in their hands? Most of the times, the appraisers are wrong but this does not mean that your sale will be ruined. You might experience a small profit loss but other than that, everything is in your hands. There are certain myths about property appraisals that sellers believe too easily. To dispel you of these myths, let’s have a look at them one by one:
The Appraiser Sets the Final Price
Say you have set a sale price for your house but when an appraisal is done, the value falls short of the price. An appraiser might have the skills to tell the value of the house but it may not be accurate. Getting three or more appraisals will only make you confused. It’s sad how the wrong appraisal forces you to compromise and lose your profit.
A Home Appraisal and Inspection Are the Same
A home inspection is used to identify problems with the house such as repairs and renovations. On the other hand, an appraisal is used to identify the market value of the house. In some cases, an appraiser might play the role of a home inspector too if the buyer is applying for FHA mortgage. So, look for the proper documentation before assigning the task.
The Higher the Investment, the Higher the Appraisal
Investing on renovations is one of the biggest mistakes that sellers make. An appraisal is based on the value of the house according to the place, not if there’s an entertainment room or a swimming pool in the backyard. You might have redecorated the garage to make it more posh, but all a buyer might want is a place to park the car. Therefore, do not make any impractical renovations that will cost you more because you won’t get a dime spent on it back in the sale.
The Appraiser Serves the Buyer
After an offer is made, the buyer brings in an appraiser. One would assume that the appraiser is working in the favor of the buyer but that’s not the case. The appraiser is actually there on behalf of the lender. The lender wants to make sure he’s not paying above the house’s value.
Market Value, Appraisal Value, Assessed Value and Online Value Are the Same
- Market Value – The value that is going around in the market for houses categorized according to the area.
- Appraisal value – The value set by an appraiser.
- Assessed Value – Value set by the area’s local tax assessors (used for covering operational expenses)
- Online Value – Websites that give you an evaluation of your house after you have entered the address.
Remember, houses are priced according to the area and their features and not necessarily on their look and appeal. It might have a small impact on the price but not that much. Therefore, when selling your house, keep these five myths in your mind to prevent appraisals from hurting your sale.