Dear Seller – When you accept an offer on your house, and the buyer is getting a home loan from a bank, the bank sends an appraiser out to see if it’s financing a home that’s worth the money they’re putting up for it.
The home will either “appraise,” meaning it’s worth what the buyer is offering, or it will “come in low,” meaning it’s valued less than the accepted offer.
In today’s wild real estate market, with many more buyers than homes available, buyers are offering to bridge the gap between what a home is appraised for and the buyer’s accepted offer. In fact, my realtor colleagues and I are seeing buyer’s offering $25,000, $50,000 and more to bridge that gap.
Some buyers do not have the money to do this, and those that do may wonder what will happen when they try to sell a home they’ve overpaid for.
Therefore, it’s truly in everyone’s best interest that the house appraise. ThinkRedDoor.com recently provided a list of some ways sellers can help receive the best appraisal possible.
- Walk around your home before the appraisal with a critical eye. Look for any damage that could decrease your home’s value. Are there loose floor boards? Does the roof leak? Do the gutters work properly? These things don’t just help the home look better—they also show the owner has maintained the home properly.
- Have your realtor inform the appraiser of any home improvements done on your home. These could include new additions, replaced HVAC units, siding, gutters, a new roof, remodeled kitchens and updated bathrooms. All will positively influence the appraisal.
- Be sure safety equipment is installed and working properly. This includes smoke and carbon-monoxide detectors and alarms, home security systems, and more.
- Do some sprucing up. Repaint the walls and hang new curtains. Install shiny new doorknobs or faucets. Small things add up—and they also give the entire home the appearance of being modern and updated. Outdated décor can have a negative impact on an appraisal, while a more modern appearance can have a positive impact.
- Clean your heart out. Wash down walls and shampoo carpets. Clear out clutter. Power wash decks, driveways and the exterior of your home. A clean home looks newer and more attractive to appraisers and buyers alike.
- Update the materials in your home. Update old countertops, paint cupboards or reface them and replace old flooring, if you can. Outdated prints and linoleum flooring look dated. You’d be surprised how inexpensive flooring can be to replace. Laminate flooring and tile will refresh a room, as will updating countertops, even if you simply add new laminate. Keep the looks neutral and adaptable, yet modern. Classic is always a great bet, as it is timeless.
- Mind the $500 rule. Things that need to be corrected or are out of date—things like damaged tile floors, old wallpaper, a broken door, or an outdated bathroom vanity—usually take hits in $500 increments. As a general rule, it is safe to assume that small issues will take $500 hits in the total home value. If the appraiser finds several of these problem issues, the result can be thousands in lost home value. As a rule of thumb, fix problems immediately that would cost less than $500 to fix. This way you’ll recover that cost in your appraisal.
- Pay attention to your yard. Mow grass and trim trees and shrubbery. Consider having dead trees removed, if possible, before your appraisal. Add some color with flowers and, in the winter be sure to clear all ice and snow from walkways and driveways. Remove clutter from both the front and backyards, including stray toys, bicycles, and lawn furniture. Be sure to thoroughly weed flowerbeds and add mulch where applicable. Houses with high curb appeal receive better appraisals, hands down.
- Make sure your realtor does research on nearby homes. What is the value of homes similar to yours in your neighborhood? What about the sales prices of homes sold there in recent months? What appraisal problems were encountered? Many of these items are public record, but if you’re comfortable, speak with the listing agents of those homes. They may be able to help you head some common problems off at the pass if they’ve recently dealt with them.
So, there you are. You have your marching orders – now go out there and help your home appraise. All parties will breathe easier, especially your and your buyer’s realtors. 👍