Selling your home in a changing market can make it difficult for homeowners and their buyers to come to an agreement on an appropriate price. Even tougher, though, can be getting an appraisal that matches the sales price. Independent appraisers are hired by the buyers’ and chosen by their lender. No one can demand that the appraiser come up with a specific value for a property. Buyers and sellers benefit from an appraisal at or above the negotiated price because this avoids the risk of the deal falling apart, buyers needing to pay more cash or sellers having to agree to a new deal. As a seller, there are a few steps you and your Realtor can take to increase your chances of a higher appraisal.
Before your appraisal
Some sellers opt to pay for a pre-listing appraisal in order to establish their home value and to decide on a list price. If you decide to do this, you and your Realtor can provide that information along with your marketing materials. Just remember that while this appraisal helps buyers understand your home’s value, their lender will still require an independent appraisal that may or may not match yours. Your home’s listed price should be based on a thorough comparative market analysis of recent sales from the last six months, homes taken off the market and homes on the market in your area. Keep all of the documentation about those homes to provide to the appraiser. While your home is on the market you and your Realtor should continue to keep track of comparable homes that sell or are listed for sale. You should gather all of your own documentation for home repairs and improvements, particularly for big ticket items such as the roof, a new furnace, replacement windows or new appliances. An approximate price for those items is also helpful. Packaging all this information in an easy-to-read list will be useful for prospective buyers as well as the appraiser.
At the appraisal
The day of the appraisal you should make sure your home is neat and clean to show the appraiser that you have carefully maintained your home. In addition, make sure you move anything that’s blocking access to spaces the appraiser will need to see, such as your fuse box, attic or basement. No matter what season it is, take the time to clean up outside, too, moving toys and tools out of the way and cutting the grass, mowing the lawn or trimming your shrubs. More than likely, you’ve done these things to sell your home, but you may need a little touch-up work before the appraiser arrives. Look around your home inside and out to find areas where the appraiser will need to walk or stand and keep them clear of debris. In addition to clearing your space of things like a stack of boxes that block the furnace or a trunk that an appraiser can trip over in the attic, you should make sure all your light bulbs work so the appraiser can see into your rooms. If you know a ladder is required to reach into your attic, leave yours accessible. While some homeowners want to be present to answer questions, it’s best to keep out of the appraiser’s way so the work can be done. It’s especially important to keep your children and pets out of the house so they don’t create a distraction. You can ask your Realtor to be present if you have special concerns, but you can also provide a note with items to notice along with your list of home improvements.
How to handle a low appraisal
If, in spite of your best efforts, your appraisal comes in lower than the sales price, you have a few options:
- Ask your Realtor and lender to challenge the appraisal with appropriate documentation that supports a higher home value
- Pay for a second appraisal – but realize that there’s no guarantee that this appraisal will be higher
- Ask the buyer to pay additional cash to make up the difference in the sales price and the appraised price – depending on the terms of your contract
- Renegotiate the contract
- Provide seller financing from your own funds to the buyer for the gap between the price and the appraisal
- Terminate the contract and put your home back on the market for a different price
Hopefully, none of these options will even have to be considered and your home will appraise for the full value of the contract