Get the best possible valuation with these home appraisal insider tips
Every prospective homebuyer desire one thing – and that is seeing these two words: “mortgage approved”, but the road to mortgage approval is long and at times, hard. The truth is it’s a meticulous process, but in many ways, it is rightfully so as there are risks involved for both borrowers and lenders. A positive ending to your mortgage application has a lot to do with having a satisfactory home appraisal. Homeowners may view appraisals as an annoying hurdle to overcome, but we would like you to view it as a necessary step to reduce the risks involved in lending people huge sums of money. After all, buying a house is a huge deal that comes with specific responsibilities. A satisfactory appraisal is one of the key factors in determining whether a mortgage application gets approved or not. Now, with a lot hinged on a home appraisal, it’s only normal for you, as a prospective homebuyer to become nervous about this particular process.
If you require a home appraisal in the immediate future, you may be sitting right now, asking the question:
“What do I need to do before I have an appraisal done?”
To save you from potential nail-biting and hair-pulling, here is a short version of the answer: You don’t need to do anything big.
At this point, major renovations and elaborate staging of the property are not necessary. Some essentials that appraisers examine like home size and lot size and market value of similar homes sold in the area are things that are out of your control. However, there are a few concerns for appraisers and lenders that home buyers and owners/sellers can address. Being aware of these concerns and addressing them properly, can make the property appraisal process easier and smoother for all parties involved. You can also help maximize the value of the property.
Let’s break down these concerns:
Lenders prioritize safety and healthy living standards
The last thing that lenders would want to have is a house filled with safety and health hazards that can threaten the well-being of its dwellers. Home hazards are a major red flag to lenders, but the truth is they shouldn’t be the only ones ensuring safety standards for homes are met. Homeowners and buyers should also share this major concern. Property appraisers are not home inspectors. A home inspector identifies the current and potential problems in the home so that the homeowners can make the necessary repairs to avoid more costly ones in the future. A home inspector will make a more in-depth testing of home functionalities. He or she checks if electrical wiring, heating, roof, plumbing and home are all up to building code standards. Property appraisers don’t normally do testing, but they will take note of obvious safety hazards, because they can greatly affect the value of the home.
So, what are examples of safety hazards?
Common items we typically consider safety hazards include:
- Exposed wiring
- Missing handrails on staircases
- Peeling paint and possible lead paint (if a home is built before 1978)
- Damp areas and/or leaks
- Illegal stoves in basements or attics
- Bars on bedroom windows without quick release mechanisms
- Broken or missing smoke and carbon monoxide detectors
- Roof damage
- Water damage
These are some the most common safety hazards found in homes, but it is important to know that this is not a complete list. There are many other hazards to look out for. Ideally, a house should be free of safety hazards even if it will not undergo an appraisal. If an appraiser finds safety or health hazards, it is his/her duty to report it. Banks and lenders will ask appraisers to go back to the property and conduct a more thorough inspection of the problem areas. This is bad news as this will delay the entire process, and risk a denial of your mortgage application. It is part of the homeowner’s responsibility to maintain a safe and healthy living environment. Look out for home safety hazards and arrange for suitable repairs before the initial appraisal. This crucial step will save you from stress and waste of time.
Appraisers make additional home testing for an FHA loan.
FHA stands for Federal Housing Administration, and an FHA loan is a type mortgage insured by the federal government of United States. An FHA loan is special as it allows a lower down payment. This is the reason why this loan is popular among first time home buyers, but the risk involved for FHA loans is higher because a borrower has more potential to default on his or her mortgage payment. Hence, the appraisal for this type of loan includes testing of more household fixtures and items. Some of these items include faucets, stoves, dishwashers, light switches, electrical outlets, toilets, heating system, and AC system.
How a house looks matters
As mentioned earlier, you don’t need to elaborately stage your home for the appraiser. You don’t have to borrow expensive furniture or hire a designer to make the space enticing. What you need to do is just clean and tidy up the house before an appraisal. A huge pile of unwashed dishes, dusty furniture, stains, cobwebs, and dirty clothes on the floor are all unappealing. They can distract the appraiser from seeing the true value of the property. Furthermore, appraisers oftentimes take photos during their visit to help them remember what are inside the rooms and spaces.
A picture is worth a thousand words.
Pictures of untidy and dirty house will just leave a bad impression to lenders who will eventually see them.
Appraisers care about home improvements, so list them all
All appraisers will discuss home improvements in their report. We are interested in not only in the improvements made in the property but also the extent and quality of such improvements. To make the appraisal process easier and faster, create a list of improvements done over the years. Include the time they occurred and if possible, their corresponding estimated costs. The list is not a deal-breaker and appraisers usually ask home-improvement related questions on their own, but having a list ready will make it very easy for them to know exactly what was done and verify it as they walk through the home. For the home owners, taking the time to think and write a list before the appraisal also decreases the possibility of forgetting certain renovations and improvements done.
Examples of home improvements are:
- New flooring
- Renovated bathroom or kitchen
- New appliances
- Replaced HVAC system
- Updated systems
Home appraisal can get tedious, but it does offer great benefits. Although a property appraisal safeguards the lender’s financial interests; it also helps home buyers determine whether they will be paying too much for a property. An upcoming residential appraisal doesn’t have to cause so much stress to the home buyer. Understand that major determining factors for home value are out of your hands in the very near term, but taking straightforward and achievable steps discussed in this article will help maximize the market value of your desired home. Once you do your part, the rest is just about trusting your appraiser to do their job.