5 Tips for Sellers to Prepare for an Appraisal

We have to "sell" your home to the appraiser

5 Tips to Prepare Your Home for a Successful Appraisal

1. Fresh coat of paint - this is wise to do before marketing the home. However, if you're under contract and an appraisal is scheduled, walk through your home with a critical eye and be sure to do paint touch-ups or paint areas you might have missed before listing your property. Use neutral colors, be sure you have declutters and don't ignore the trim!
2. Follow the "$500 Rule" - There is a fairly common train of thought that homes appraise in increments of $500. So defects found will ‘cost’ $500 in a home’s appraised value. Thus, repairs or improvements that can be made for under $500 are likely worth taking on. Some are very minor, such as drain issue fixes, broken light-fixture replacements, etc.
3. Smells - do a thorough cleaning and make sure there are no smoke or pet odors. If you're cleaning and painting, the home should smell fresh, like new construction. Be sure all pet hair, food, smells are cleared away before the appraisal appointment.
4. Declutter - the appraisal comes after you're under contract and you may have started packing, etc. already. Prepare the home for the appraisal appointment as if its for a buyer showing. Appraisers are human and the emotional impact of how your home presents can influence the documented valuations.
5. Home Improvement Documentation - I like to have a folder for appraisers with market data, and details on home improvements. As your listing agent, I'll provide that to the appraiser who makes the appointment. Or you can prepare and leave on the counter for the appraiser. On one of our flips, this made all the difference. I provided a list of all the improvements we made along with the costs associated as there weren't local comparable sales - and it worked!

What if the appraised value doesn't match our contract?

When we meet to go over the steps to successfully sell your home, we'll discuss in detail the negotiation that happens when appraisals don't meet the agreed upon contract price.

Generally, there are 3 negotiation options to bridge a gap in appraised value;

1. Adjust the contract to the appraised value - this is usually the least favorable for sellers, but a fair approach as the valuation is independent and not based on the buyer's financial status.
2. Meet somewhere in the middle - sometimes buyers are willing to pay extra cash on the transaction to help bridge the gap in valuation. Often, buyers and sellers split the difference 50/50 but its entirely negotiable.
3. Contest the appraisal - if the value is way off, and both agents agree, sometimes we can collaborate to contest an appraisal or ask for a second appraisal. This is the most difficult option and not as successful as taking proactive steps to avoid a gap in appraised value.

Know your market data

When we first meet, we'll go over market "comps" (comparable sales). Generally, you'll want to see 3 active listings, 3 under contract and 3 recent sales within 1/10 mile. While I'm not an appraiser, we know from experience the general parameters appraisers use to pull comparable sales. If you're open to updates, I'll also set up regular market reports for homes of a similar age and size so you can track the micro-market trends such as price reductions, days on market and recent sales in your area.

Sometimes there are off-market sales that can support your value that won't show on MLS. For manufactured homes, I always touch base with the property manager to find out about new homes that may have been placed or sold in the community without being published.

As your real estate advisor, I'll guide you through the process of navigating the appraisal and all negotiations involved in a successful sale.