A common question home sellers have is, “Should I get an appraisal before selling my house?” However, is a home appraisal necessary for determining a home’s value, or can you get another type of valuation, like a comparative market analysis?
In this article, I will talk about what a home appraisal is and whether you need it. Read on to learn whether spending the money on a home appraisal is worth it.
Should I Get an Appraisal Before Selling My House
Before we discuss whether appraisals are necessary before home sales, it’s essential to understand what an appraisal is. An appraisal is a valuation by a third party — a licensed appraiser – who uses various factors to determine the appropriate sale price for a home.
The appraisal report will contain your home’s final appraised value, which depends on factors such as the listing prices of similar homes in the area, the square footage of the house, the number of bedrooms, recent comparable home sales, and more.
Most of the time, if the buyer is trying to take out a mortgage on your home, the buyer’s lender will require such an appraisal report. They want to ensure that the home’s fair market value matches the loan amount.
For example, let’s say you are selling a house with an asking price of $300,000, and the buyer is requesting a loan of that amount from their mortgage lender. However, the appraiser concludes that the home is only worth $250,000. In that case, the lender would be lending an extra $50,000 for which there is no collateral, which is risky for them.
Most of the time, potential buyers pay the appraisal fee, so you don’t have to get your own appraisal.
You don’t usually need an appraisal before listing your home. There are other ways to determine the listing value of your home; for example, your broker’s professional opinion of value is often enough. An experienced broker will know what home prices in the area are like and be on top of market trends.
There are times, though, when a pre-listing appraisal makes sense. An example is if your home has unique features, such as solar panels, a generator, a detached suite for a spouse’s parents, a home gym or cinema, or some other characteristic that is not common in most homes.
In that case, looking at the real estate market isn’t enough to determine the property’s value because those other homes don’t share the same unique features. A professional appraisal can help account for remarkable home improvements and determine how much potential buyers would be willing to pay.
Appraisals are also more critical in rural areas, where there are not many homes to which you can compare yours. In more urban and populated areas, there will be more comparable homes of a similar size and age to use as a benchmark.
The Process of Getting an Appraisal
The home appraisal process is relatively straightforward. Usually, the lender will order the appraisal; in the case of a pre-listing estimate, you will be the one requesting it.
You must find an appraiser licensed and qualified to perform the valuation. Furthermore, they must be impartial to the sale and have no bias or vested interest in the lender approving the loan.
The appraiser will perform a walkthrough of your property and check its overall state. They might look at things such as the age of the HVAC system. They will also take note of factors such as how many bedrooms and bathrooms your house has, how much total square footage it has, and any surplus land on the property.
Likewise, they will look at recent comparable sales in the area and other market trends. A home appraisal is comprehensive and takes multiple factors into account.
Once the appraiser has completed the appraisal, they will share a copy of their report with you. The report will contain information on which the appraiser has based their valuation, including how they calculated square footage, photos of the interior and exterior, and even pictures of comparable properties that the appraiser used in their valuation.
Things You Need To Know About a House Appraisal
Understanding the difference between a professional home appraisal and other forms of home valuations is essential. For example, home sellers can get a CMA instead of a home appraisal before selling. CMA stands for Comparative Market Analysis, and you don’t need to be a licensed appraiser to do one.
Your real estate agent can do one for you — that’s your best option if you sell through a realtor. If you are listing your home as FSBO (For Sale by Owner), you can also perform a CMA yourself by looking at similar homes sold online on sites like Zillow.
The buyer can also perform their own CMA, using their own sources to collect data.
You can do a CMA yourself for free. A home appraisal, on the other hand, typically costs a few hundred dollars, sometimes running up to $750 or even more if the property is enormous. For huge properties, such as commercial properties or large farms, or properties with multiple unique and complex features, it could go up even more — into the thousands of dollars.
It’s also essential to understand the difference between a home appraisal and a home inspection; many confuse the two. A home appraisal focuses on determining your home’s market value based on the home’s features and comparable sales.
However, a home inspection is for finding hidden issues in your home, such as plumbing issues, structural damage, problems with the HVAC system, hidden mold, and other issues that could lower your home’s value. A home inspector doesn’t determine your home’s overall value, nor do they look at comparable properties in the area.
A home inspection also costs a few hundred dollars, and the buyer usually pays for it. However, you may agree to cover the cost as an incentive to get the buyer to purchase your home and close the deal. Furthermore, you may get a home inspection before listing to ensure there are no hidden issues you aren’t aware of.
If you discover serious issues, like foundational damage, you should fix them before the sale (unless you’re selling it as-is to a cash buyer). However, check out these things not to fix when selling a house – not everything is worth repairing.
Why You Might Not Be Happy About Your House Appraisal
You might not be happy with the home appraisal if the price is lower than you expected. Various things may lower your home’s value. For example, you might have been hoping that your solar panels or home theater would raise the price of your home significantly, but the appraiser might have determined otherwise.
The real estate market in your area might also not be what you thought it was.
Finally, every appraiser is different. While they are supposed to be thorough, yours may not have taken all factors into account. For example, they might have compared your home to others that aren’t that comparable, especially if the area is less populated and more rural.
The real cost of selling a house is often higher than you think after factoring in real estate agent fees, property taxes, and other fees. Therefore, a low appraisal could seriously reduce the amount of takeaway money you get from the sale.
Challenging Your House Appraisal
If you feel like your home appraisal was too low, it is possible to challenge it. First, as a home seller (or a buyer), you have a right to see a copy of the report, which should contain the methods the appraiser used.
You may discover that they did not take into account all the renovations and upgrades you made to your home that could increase its value. Alternatively, upon closer examination of the comps (comparable properties) in the report, you may discover that the appraiser was too quick and used properties that were not as comparable as they thought.
You should also look into the appraisal method. Did the appraiser enter your home and conduct a full inspection, as they should? Or did the appraiser simply conduct an online appraisal, which isn’t that much better than a CMA?
If they did enter your home, how much time did they spend there? Most appraisers only spend 20 minutes in your home, but some may be even quicker and only look at your home superficially.
When challenging the appraisal, be respectful. Don’t insult the appraiser or attack them. Instead, respectfully raise your concerns with them and ask them to reconsider the conclusion they came to.
Consider asking your broker for help. Your real estate agent or broker has likely seen similar situations and knows how to deal with appraisers who give valuations that are too low.
Of course, you can also sell to cash home buyers in Boise and skip the entire home appraisal process. Cash buyers will appraise your home themselves, but you won’t need to pay for a home appraiser upfront.
So, should I get an appraisal before selling my house? You don’t usually need to, unless your home has unique features. If you are selling to a cash buyer, you also don’t need an appraisal.
We buy houses Kuna buyers love. Whether you need a quick closing or want to wait for a little, we can close on your schedule. You also won’t have to pay any real estate agent fees or pay for a home appraisal upfront. Our process is quick and simple, and you can get cash in hand in as little as a couple of weeks.
After requesting a quote online, we will review the details of your home and set an appointment, so we can view the property in person. If you are not available, you can also send us pictures or videos of the property so we can evaluate it.
We will then present you with a fair cash offer, which we base on factors such as square footage, comparable homes in the area, and more. Selling to us is one of the best ways to sell a house fast in Idaho.