What All Goes Into a Home Appraisal?

We’re breaking down the appraisal process step by step so homeowners know exactly what to expect and how to handle a low appraisal.

A good appraisal is one of the most important parts of getting a mortgage. Ultimately, it decides just how much a bank is willing to lend you. A bad appraisal can kill your plan for a new home faster than a bad credit score could. The appraisal is a way of ensuring the asset that the bank is loaning money for will earn their money back in case of a default. It’s also a way for you as a buyer to ensure you’re not overpaying for a house.

So what do appraisers look for? An appraisal usually starts with an inspection of the home and then compares sales prices of comparable properties in the area. The appraiser will prepare a report for the lender, which shows how they determined the value, considering things like the size and condition of the house. They will also consider improvements made to the house. Structural issues like a cracked foundation will also be included.

There will also be an evaluation of recent market trends in the area that may affect the value, as well as a comparative market analysis that supports the appraisal, along with maps, photos, and sketches. It’s important to remember that an appraisal is not a home inspection. It will note obvious issues, but will not inspect them to see whether they’re up to code. You’ll need to hire an actual inspector for that; this will help you avoid costly nightmares down the road in the event that something is wrong with the house.

So what happens if the appraisal comes in low? Is it time to throw in the towel? You need to find out why the appraisal was low. It could be something that the homeowner could correct, or the home could simply be overpriced. If it is overpriced, see if the homeowner will come down on their price. If you want, you can order another appraisal, but if you do, keep in mind that you’ll have to pay for it and the previous appraisal will be on record.

If the appraisal is low, you need to find out why.

If you’re the seller and your appraisal comes in low, what can you do to make up for it? First, find out why it came in low. It could be because of maintenance issues or repairs needed, and if this is the case, you can have these items fixed and then order another appraisal. You could also increase the appraised price by focusing on cosmetics, especially in older homes. New paint, appliances, carpet, and windows always add value to your home.

Hopefully, you found this information helpful as a homeowner. If you have any questions about appraisals or you’re thinking about buying or selling a home in Houston, give us a call or send us an email. We’d love to help you!