Becoming a homeowner is one of the biggest moments in our lives and we take pride in the work we put into it to make it a home. Over the years, we do a bunch of work to it – be it home improvements, complete remodels, or regular maintenance. And, over time, the housing market ebbs and flows, causing the value of real estate to fluctuate.
It’s not uncommon for homeowners to have appraisals done to keep up to date on how much their home is worth, regardless if they’re selling or not. However, for people who are new to this sort of thing, people may not understand the home appraisal process and what it means.
We’re here to help!
Home inspection vs. home appraisal
First off, it’s important to know the difference between a home inspection and a home appraisal.
A home inspection is when an inspector will look at the home to make sure it’s safe to live in. They’ll check the home’s systems to see that they’re working properly. They’ll look at the home’s structural integrity to make sure it’s not going to fall down around the homeowner (figuratively and literally speaking), and there aren’t safety hazards.
A home appraiser, on the other hand, is only interested in determining the home’s value. They’ll compare your home to similar homes that have sold recently. They’ll take in factors like location, any upgrades, the age of the house, the amount of livable space, and so on. With these details, they’ll determine the property’s fair market value and (if you’re selling) determine if the listing price is reasonable.
What happens if the property isn’t worth the asking price?
If the appraiser tells you that the home doesn’t appraise for what you’re asking (either above or below), you’ll need to adjust your asking price. If it’s too high, unfortunately you’ll need to lower the price because most lenders aren’t going to give someone more money than the house is worth.
However, if your asking price is lower than the appraised value, then you can definitely increase your asking price! Of course, if you are trying to appeal to buyers trying to find homes in your area and you need to sell quickly, you can keep the price low. But, remember you’re losing money that way!
How to have a good home appraisal
If you’re trying to make sure your home appraises well, there are some things you can do.
Firstly, make sure the house is immaculate! While appraisers don’t put so much weight on how clean your house is, it’s always a good idea to present your house in the best light possible. This includes taking care of cosmetic repairs like painting walls, patching holes, and making sure doors and windows work properly.
Next, you should have all of your paperwork ready to go. These documents include paperwork that lists your property’s size, the age of the home, and what you bought the house for. You’ll also want to have any warranties and receipts for appliances or renovations. Those documents will help you state your case as to why you’re pricing your house as such.
Home appraisals are a useful tool that every homeowner should have done every so often so they know just how much their home is worth. In doing so, you’ll have a good idea if and when you should sell.