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Home Appraisal - How To Make The Best Of It.

Feb 21, 2008
If you are selling your home you should get an appraisal before you decide on the selling price. A real estate agent's market analysis will get you close to the right selling price, but a $3,000 to $5,000 variance is a lot of money. An upfront appraisal will protect your equity and be well worth the cost.

You should understand the appraisal process so you can increase the value of your home. These are the major steps in the sequence followed by appraisers:

1. Research the subject property as to size, bedrooms, baths, year built, lot size and square footage.

2. Gather data of recent sales in the neighborhood. The appraiser needs to locate at least 3 similar-sized homes that have sold in the neighborhood with in the last six months. The homes also need to be within one mile of the subject property. These homes are called the "Comparable Properties" or "Comps" for short.

3. The field inspection consists of two parts: a complete inspection of the subject property, and the exterior inspection of the comparable properties.

The property inspection consists of taking photos of the street scene, front of the home and rear of the home. The appraiser will make an interior inspection for condition, noting any items that would detract from or add to the value of your home. He also draws a floor plan of the home while doing the inspection.

The comparable property's inspection is limited to the exterior. Features that cannot be seen from the street, the appraiser uses: reports from Multiple Listing Services (MLS), California Market Data Cooperative (CMDC), county public records, and appraisal files to help determine the condition.

4. When the field inspection has been completed the appraiser must determine which comparable homes most resemble the subject. Then he/she makes adjustments in value for any differences. The appraiser must go through a reconciliation process with the comparable properties to determine a final estimated value of the subject property. This method is called the "Direct Sales Comparison Approach to Value", and it accounts for nearly all of the considerations in determining value of a single-family property.

Remember that the appraiser will be taking photos of the street scene and the front and back of the home. The photo of the street scene gives the lenders some kind of idea as to the type of neighborhood the home is located. The picture of the front gives the lender an idea of its condition and curb appeal. The photo of the back of the home and part of the rear yard is another indicator of the home's care and maintenance.

Over 90% of the time what you see in the condition of a home exterior will be repeated almost exactly inside the home. So one of the most important things you can do to improve the value or perceived value is to enhance the curb appeal of your home, and don't forget to clean up the back yard.

The appraiser will call in advance for an appointment to inspect your home. That is the time to supply any information about the home size, number of bedrooms, bathrooms, pool, enclosed patio, etc. The more known about the property prior to inspection the better the appraiser can focus on researching the most similar comparable homes. Doing your homework will increase your chances of having a good appraisal.

While your home is being inspected don't follow the appraiser from room to room causing distraction. Instead, allow the inspection to go smoothly. In case the appraiser has any questions, be close by to answer them. The time to mention the things you think are important is either before or just after the inspection.

Get your home ready before the appraisal. Clean it, put fresh paint where needed, and clear the clutter inside and out. You should also make any minor repairs needed and be sure to manicure the front and back yards.
About the Author
Connie Sanders is a strong supporter for consumer knowledge in the mortgage industry. Visit her site on FHA Guidelines to learn about your mortgage options. Connie also owns mortgageunderwriters.com which is another information only site teaching mortgage guidelines.
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