Time for an Appraisal
One of the most important jobs for your real estate agent is to determine the value of your home by developing a Comparable Market Analysis, which will be used in pricing the home for the right amount.
If your property isn’t attracting serious shoppers, your agent may recommend that you invest in an appraiser to get a second pricing opinion, as the appraiser will come in with an independent, unbiased opinion to help ensure your price is correct for the market.
“An appraisal is important in today’s market especially, because it’s an objective and unbiased source of information,” says Michael H. Evans, president of Chico, Calif.-based Evans Appraisal Service Inc. “The appraiser is an independent professional who performs a service for a fee rather than for a commission and is therefore not as invested as others are who are making pricing decisions.”
Appraisals allow for homeowners and buyers to establish “fair market value.” In addition, an appraisal allows a lender to know how much they can safely lend.
“Credible opinions of value can help to stabilize the real estate market,” says Joseph C. Magdziarz, president of Chicago-based Appraisal Institute, a global membership association of professional real estate appraisers. “Appraisers today are doing the same thorough, fact-based research and analysis they have always done.”
A home appraiser will compare the condition of your house in relation to the comparable properties in the neighborhood and will give you a reasonably good idea where your house fits in relation to recent sales.
According to Evans, a home appraisal can range in length from two pages to more than 100. It will include details about the house, a description of the neighborhood and side-by-side comparisons of similar properties. It will also contain an evaluation of the area’s real estate market, notations of major problems with the property that will affect its value and an estimate of the expected time it will take to sell the property.
Earlier this year, the Appraisal Institute released several tips for consumers and guidance for homeowners and buyers seeking to ensure their sales are completed in a timely manner.
- Make sure the lender hires a qualified appraiser (such as a designated SRA, SRPA or MAI member of the Appraisal Institute). The lowest-priced appraiser does not necessarily equate with the most qualified. This is a time to get the numbers right.
- Accompany the appraiser during the inspection of the property if possible. The more active of a participant you are in the process, the more you will understand it, and be able to catch any errors.
- Request a copy of the appraisal report from the lender. Federal law requires that you receive a copy of the appraisal within 30 days.
- Appeal the appraisal if appropriate. Market conditions do change, especially in these economic times. If you feel that new information may change the appraisal, be sure to speak up.
- Have your agent ask the lender to order a second appraisal by a qualified and designated appraiser.
- File legitimate complaints with appropriate state board or professional appraisal organizations.
Remember, you needn’t agree with the outcome of an appraisal. You and your agent can work with the figures and determine if you should change the sale price or not. A home appraisal, no matter how scientific, still ends up being the opinion of the appraiser and to some degree is a judgment call.