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The Biggest Home Appraisal Myths You Should Ignore
When selling a home, the appraisal process is usually the last step before the final walkthrough and closing. If your offer contains an appraisal contingency, then the appraisal has the ability to alter the outcome of your home sale. Plus, the appraisal process can be very confusing, so it's important to separate fact and fiction. Our real estate agents pulled together a quick list of common appraisal myths we always encourage our clients to ignore during the closing process:
- Myth: The Buyer Hires The Appraiser
Some sellers fear that the appraisal works on behalf of the buyer and, as a result, might be more likely to undervalue the home. While it's true the buyer pays for the appraisal, the lender actually chooses an independent third-party appraiser. The buyer's lender is incentivized to ensure the appraisal is as accurate as possible to help mitigate risk. As a result, you can feel confident the appraiser will not lean toward the best interests of the buyer. - Myth: The Appraised Value Should Be The Sale Price
It's normal for appraisals to come in higher or lower than the buyer's offer. For example, some of these Farmingdale homes for sale may appraise for higher than the actual sale price. It doesn't necessarily mean you're leaving money on the table. Attempting to negotiate a higher price based on the appraisal can be risky.
If the appraised value is lower and the buyer included an appraisal contingency, then the buyer will have the opportunity to negotiate. Lenders will only cover up to the appraised value, so the buyer may request that you cover the difference. - Myth: Larger Homes Appraise For More
The size of your home is just one of many factors considered when calculating its home value. Many people falsely assume larger houses net higher appraised values, but the location, amenities, quality, and nearby recent home sales all play a role as well. - Myth: The Appraiser Conducts A Home Inspection
While an appraiser will do a walkthrough of the home and property, an appraisal is not the same as a home inspection. An appraiser will not inspect every facet of the home when estimating the property value. They'll do a high-level walkthrough and compare your property to other nearby homes that have recently sold. - Myth: An Appraisal Is Always Necessary
An appraisal is usually a requirement from the buyer's lender. If the buyer is making an all-cash offer (ie, not financing the purchase), then an appraisal might not even be necessary. This is one reason why all cash offers are typically more appealing to sellers. - Myth: All Amenities Increase Your Home Value
Investing in certain upgrades and renovations can help boost your appraised value, but remember, not all amenities are created equal. Less common amenities, such as home movie theaters or swimming pools, might not add much value. Since much of the appraisal is based on nearby home sales, these amenities won't matter much if your neighbors don't have them.
If you're a seller in the middle of the closing process, keep these myths in mind when it comes to the appraisal. In most cases, the appraisal process is fairly smooth and simple, and your real estate agent will help guide you through the process.
Contact us today for more home selling tips.