The value of your home, as determined by a real estate appraiser, is an important piece of information for the broker, the lender and the buyer. As such, the accuracy of the evaluation is critical, as a lot rests on it.

It is very important to work with an unbiased appraiser who can provide a thorough evaluation based on in-depth market research. Just as important as working with an objective appraiser, is understanding the process itself and the many misconceptions of the procedure.

Here are a few real estate appraisal myths that you should be aware of when undergoing the evaluation process.

Myth #1:  The appraised market value will be the same as the asking price

Reality: Based on the current state of the market – i.e. a “buyers’ market” versus a “sellers’ market,” the appraised value of your home may not be the same as the selling price. For example, in a “sellers’ market,” where there are multiple offers, also known as a “bidding war,” the selling price of your home can be inflated above the appraised market value. On the other end of the spectrum, in a “buyer’s market” you may unfortunately have to lower the asking price of your home, often meaning it will sell for less than its appraised value.  While multiple offers are good for the seller, the buyer may run into the opposite problem if they choose to sell down the road in a less active market.

Myth #2: The homebuyer is entitled to a copy of the appraisal since they paid the fee

Reality:  Even though you are the one footing the bill for the appraisal, you are technically not the client – the lender in which the appraisal is being prepared for is. Similar to the doctor patient or lawyer client professional confidentiality agreement, the appraiser has a legal obligation not to disclose the content of his report to you. As the prospective homeowner, you may be privy to a copy of the appraisal, if the lender agrees and provides consent to the appraiser. With that said, as some of the information in the appraisal is your personal property, it can be accessed under the Personal Information Protection and Electronic Documents Act (PIPEDA) act.

Myth #3:  The investment a homeowner puts into renovations and upgrades will be fully reflected in the appraised value of his home

Reality:  Unfortunately upgrades and renovations do not always impact your home’s appraised value – no matter how much you spend or how good your home now looks. The appraisal will depend on the quality and the value of the renovations.  It is also dependent on the market conditions of your neighborhood. At times, upgrades may even negatively impact your home’s value. This happens when the renovations you have made are unusual in a given market. So, before you sink too much money into updating your home, it is advised to get an expert opinion from an objective appraiser that you hire independent of the bank.

An Appraiser’s Perspective

Whether or not the buyer is willing to pay your asking price, an appraisal is a necessary step in selling your home. This is because the lender requires an objective evaluation from an unbiased, professional, third party to determine your home’s true value. But what exactly do we look at when in an evaluation? Here are five key areas an appraiser assess when determining the market value of your property.

Condition of the Exterior

An obvious place to start is the exterior of your home. An appraiser will look at your home’s fixed qualities. This includes its age, structure and location. Specifically the appraiser will consider several areas, some include things like:

  • the quality of construction
  • the condition of the roof, foundation and even driveway
  • your neighborhood and how your house compares to those around it

Condition of the interior

No matter how well maintained the exterior of your home is, and the surrounding property, the condition of the interior is an important factor in assessing the value of your home. For example, an appraiser will pay close attention to things like the condition of your windows, floors, plumbing, electric and overall state of your bathroom and kitchen.

 Specs of your home

The next thing the appraiser will look at is the size of your lot and the size of your home.  Bigger lots and houses are evaluated higher typically because buyers tend to prefer large homes and properties.  For example, more bedrooms, more bathrooms and a large backyard means a higher market value. Appraiser will also look at things like number of closets, and additional rooms like laundry rooms and mud rooms when assessing your home.

Upgrades

Renovations, like new floors, an upgraded bathroom or kitchen are considered when apprising your home. Though only aesthetic, a fresh coat of paint can also play a factor in your home’s evaluation. In the case of older homes, pay special attention to plumbing and electrical upgrades to ensure that they are up-to-date.

Add-Ons

Extras that make your home unique will also be appraised. Additional items considered could include things like:

  • A fireplace
  • security system
  • central-air
  • the garage and added features
  • an in-ground pool
  • a well-maintained deck

 

While you may not be able to sway an appraiser’s evaluation of your home, there are certainly things you can do help ensure you are prepared. Knowing what appraisers look at can help you determine whether or not your home requires upgrades, repairs or a face-lift. Even if the fixes are not in your budget, understanding what is appraised will help you prepare mentally, and financially, for the final verdict.

 

For more information about appraisals, please contact us here: http://www.ucspigeonroy.com/contact/