Real estate appraisals are an integral part of buying and selling homes. Appraisers work with real estate agents and mortgage providers to ensure loans issued to a buyer are appropriate in light of the value of the home. Many times, the assessment is made after buyers have agreed upon a price for the property. It can be upsetting and confusing if the appraiser assesses the home value at a much lower price than the contract amount. In hot and rapidly developing markets, the chances that the appraised price comes in under the contract price are even higher. Real estate appraisers often rely on historical selling prices to determine a home’s value. In markets where values are quickly rising, the data appraisers use may lag behind the market and cause a gap between the appraised value of the home and the asking price.
Getting an appraisal under the contract price is frustrating for the seller, the buyer, and the real estate agent alike. Happily, this situation can be avoided when real estate agents provide appraisers with all of the information they need to determine the accurate value of a home that is in line with the current market. So what do real estate agents need to provide appraisers with to ensure an accurate appraisal?
Real Estate Agents Should Be Proactive
One way real estate agents can prevent the appraised value falling short of the agreed upon price of a home is to work with an appraiser before the home goes on the market. As a real estate agent, you can provide an appraiser with the information you would use to set the asking price. In return, the appraiser can give you insight into what they consider when determining the value of a home. Partnering in this way ahead of time will let you know if the final appraisal of the home will likely support the price your seller is hoping for. Working with a real estate appraiser before you list can also help you set expectations with your seller, resulting in a realistic asking price.
Another benefit to working with an appraiser prior to listing a home is that they will show you any areas of concerns or issues they have when assessing the property. This gives your seller an opportunity to rectify issues that would lower the appraised value of their home ahead of time, or adjust the asking price accordingly.
It is important to remember that although a pre-listing appraisal is a great way to set an appropriate asking price, you will not be able to use the exact same appraisal when an offer is made. Lending guidelines require a new appraisal to be done before closing to support the agreed upon price with the buyer. Getting a pre-listing appraisal is still worth it in that it is a proactive step that a real estate agent can provide an appraiser to make sure that, when the time comes, the appraised home value is in line with the contract amount.
In short, working with a real estate appraiser from the start can help lead to stress free closing for you and your client.
Real Estate Agents Should Provide Strong Market Data
Another way to ensure a strong appraised value for a home is for real estate agents to provide appraisers with an accurate picture of the market. If you did not work with an appraiser prior to listing, you likely did a lot of research to determine an appropriate asking price. Share all of your hard work with the appraiser! This will help them understand what the contract price is based on and examine the evidence that supports it.
A good place to start is if you had a CMA (comparative market analysis) done, give the appraiser access to it. Real estate agents should also provide appraisers with the comparables they used to determine asking price. Remember, you want comps to be reflective of the current market and demand for the home you are selling. Characteristics of strong comparables to the home you are selling are:
- They have similar square footage
- They have same number of bedrooms and bathrooms
- They are located within a 1 mile radius
- They were built around the same time
- They have similar finishes and upgrades
- They are in the same subdivision and school district
- The were sold recently
It is very important that your comps are recent. It is best if you can provide data on homes that have been sold within the last 90 days. The purpose of proving this information is to help the appraiser understand the most current state of what can be a rapidly changing market.
Real estate agents can also provide appraisers access to back-up contracts. If you have 5 offers on a home with buyers that are all willing to pay the same price, it will show the appraiser that the current contract is not out of line in light of the market. You will find that providing the appraiser with strong market data is key to getting an accurate appraisal.
Real Estate Agents Should Showcase The Property And Its Updates
You have put in a lot of work making sure the seller’s home looks as attractive as possible for potential buyers. Keep it up for the appraiser! When the appraiser is at the home, make sure the home looks like it would if you were showing it to a potential buyer. Verify that the seller has resolved any issues and that there is no apparent deferred maintenance in or around the home. Appraisers will wonder what else might be in disrepair if they see obvious signs of neglect, which may result in a lower appraised value
In addition, real estate agents should provide appraisers with a current and detailed list of any property updates as well. Provide them with as much information as you can about the age and quality of the updates. Highlighting these features will help appraisers understand why the asking price of the property may be higher than historical sales data would predict and also help them make an appraisal that will support your contract.
Real Estate Agents Should Discuss Intangibles Motivating Buyers
One visit to a home cannot capture its full allure to buyers in a specific market. Make sure you let the appraiser know about what makes the particular home they are appraising special. Additional background information about the area around the home can be very compelling. Is the home located in a very desirable or historic neighborhood? Are buyers eager to buy in this specific area due to close proximity to a vibrant downtown area or iconic sites? If the home is within walking distance to excellent schools it will be more desirable to potential buyers. Real estate agents can provide appraisers with a full picture of the value of a home by sharing the intangible factors driving the market where the home is located.
Let’s Work Together
As a real estate agent, you want to do everything you can to make sure your client has a stress free experience that ends in a successful sale. Working with real estate appraisers and providing them with pertinent data and insights about the seller’s home will get you the best home appraisal, helping the whole process go smoothly from listing to closing.
Contact Us To Learn More About What Appraisers Need To Provide Appraisers
If you would like more information about what real estate agents should provide appraisers for a strong assessment, call us at 1-801-882-2292 to schedule an appointment or request a free quote today!