The Appraisal is Perhaps the Most Important Showing You Can Have
Congratulations! Your home is under contract! Incredibly and historically low interest rates and near all time low inventory levels usually mean...higher prices! Guess what? 2020 is no different because those two factors have lead to price increases across the board. Great news for sellers, great news for Buyers because a year ago at much higher rates their "dream house" may not have been attainable. The next things that occur are where the rubber hits the road, and if you're a Realtor® or an Agent, you know exactly what we're talking about...the Home Inspection and then the second half of the "one-two" punch, the appraisal.
While it's subject to uniform reporting practices and most adhere to the Uniform Residential Appraisal Report, the appraisal is still a very subjective exercise. Appraisers are chosen by the Lender, not the Buyer or Seller, by way of an approved list so there is no eminent threat of impropriety. The vast majority are "in person" appraisals where the Appraiser takes detailed notes, photos, and does a comprehensive overview of all matters under their purview. Except in certain circumstances, the "drive by" appraisal is a rare commodity these days, as it should be.
The attached article explains the intricacies of the process and some basic things you can do to prepare. In a nutshell, the best way to prepare is to act as if this is another showing to a prospective Buyer and it's your job to demonstrate that the care you have kept, the maintenance you have done, and the updates you have made both mechanically and cosmetically have effectuated the value for which the house should sell. Of course you can't control what and how comparable sales are valued, but keeping them in sight as a guideline can never hurt. Automated valuations are just that...automated (see Zestimate*). These are data driven and have no means to quantify the things we described above like updates and maintenance when comparing to the data of recent, and in many cases, not even so similar transactions, which is why the range of value is so wide from the low end to the high end.
They are, just like a "drive by" appraisal, nothing more than a guideline and should not be used in place of an actual appraisal, Broker Price Opinion (BPO, or Competitive Market Analysis (CMA). If you've not heard of the last two, then it's been a while since you've sat with a Realtor® or an Agent and we would strongly recommend doing so even if you're not 100% sure you're going to sell or not, and that time spent can be some of the most productive you'll have for the entire process. DON'T underestimate the importance of the appraisal, and please DON'T assume because a Buyer agreed to pay your price that an Appraiser will rubber stamp it, those days are gone! Like the old adage goes; "Measure Twice, Cut Once"...you'll be glad you did.
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