Avoid A Low House Appraisal Legally
The appraisal process is usually requested by the lender as part of the mortgage approval procedure. This appraisal value will determine the current market value of the home, and the amount of mortgage the buyer will be given. Appraisal problems and low appraisals are the seller greatest worry. Here you can read some professional tips and information how to increase your house appraisal.
How to Legally Increase Your Home Value
There are several things you should not do, increasing your house appraisal needs to be done legally. there are specific laws in each state about which actions are forbidden. In general you should know that trying to ‘inflate’ the house value by influencing the appraiser or by misleading the appraiser is against the law.
The appraiser may file a complaint against you for trying to interfere with their work, and trying to inflate the home value beyond their real market value. For this reason an appraiser may not be given any commission (direct or indirect) from the lender, buyer or the seller in any stage of the deal.
Still there are many ways you can influence the appraisal of your home legally, in most cases it would be ‘helping’ the appraiser and making their life more easy when they are at the reach stage and comparing the current closing with other real estate closed deals.
In order to find a good appraiser, ask them about the data sources they use to evaluate homes, ask about their appraisal process and before you ask them about their appraisal fees and costs be sure they are certified appraisers.
Understanding The Appraisers Work
How appraisers ‘know’ or evaluate the real market value? They need information so they could compare “apples to apples”. The appraisers are professionals for collecting information and doing property valuations.
The appraiser report will help the lender know how much the house is worth NOW if it is sold on the current market. This is the only way the lender can know they are not giving too much money to the buyer, and by that lowering their risk. In case the buyer fails to be current on their mortgage, and will reach foreclosure, how much the house will be worth if it is was sold promptly.
The appraiser collects data from any source they have to find and compare (comp) three other similar real estate deals within one mile from the home they evaluate, in the last six month. So there are three main parameters to know they will be searching and you can be using to increase your house appraised value:
- Similar property closed deals.
- Within one mile.
- At the last six month.
The appraisers have many public data sources to find out more about the property, such as Data Quick and NDC data, and MLS (Multiple Listing Services) which real estate agents sometime use. The appraiser needs to evaluate the neighborhood and the community too, as they have influence on the house and the probability to sell it at the current market value. At last there is the house appraisal, when the appraiser takes a look at the house, windows, flooring, roof, heating and sweage..
The Most Important Tip For Increasing Home Appraisal
The most important tip about increasing your house appraisal is to remember the appraiser is a human person like you! They are not an ‘excel sheet’ people which just fills the figures and spits out the total sum. Appraisers are people, they have families, they want free time to spend with them too, they want their job to be easier (searching for information can be frustrating) they will be glad to work with ‘nice’ people, they will be happy to please, they like to be appreciated – they have an ego too.
So instead of focusing on how to increase your house appraised value by manipulating the figures (which may send you to jail) focus on helping the appraiser! Assisting them with new data, with new sources for information, with new insights of the property, neighborhood and community.
How To Increase Your House Value With Markets Insights
The real estate appraiser needs a ‘Comp’ they need at least three similar deals they can compare your house to, the deals needs to be at the close surrounding (1 mile) and they need to be current (last 6 month). Since you live in your neighborhood you can increase your house appraisal by beginning to collect comparable deals. They need to compare ‘apples to apples’, and your job is to help them do exactly that.
How are you going to do it, simply by either finding more ‘apples’ which are similar closed deals to your house value, or learning why similar deals (‘apples’) are actually ‘bananas’ because they where sold lower for reasons which are incomparable to yours.
The best way is to reach all local real estate agents, real estate lawyers, lenders and mortgage brokers. Each of these professionals are experts for the local real estate markets from different aspects.
- The real estate agents can share with you on sales they know that taken place in the last 6 month. You might be doing a better job than the appraiser who is overloaded with work, and find high value closed deals the appraiser might have missed.
- The real estate can share insights about closed deals which may be low. If a person was stressed to sell for a financial reason or needed a surgery, they might accept a lower price for their house. The appraiser might see a house sold for 15% lower than it should, and may want to compare it with your house. The real estate information might make that deal non-comparable -‘apples to bananas’.
How To Increase Your Appraisal With Maintenance Records
The appraiser will check the house to see that it is in a good condition. If the appraiser is an FHA appraiser the house appraisal will be much more thorough and there will be many aspects checked to see the place is safe and secure for proper living. Read here further on what FHA appraisal inspects.
The appraiser need to know the house was maintained and well kept. You can help them by keeping and showing maintenance proof of projects you have done. Find the handy people who have done the projects for you, search for the invoices as evidence for how much you have invested. Keep the names of the companies you hired for the roof repair, the window changing.
If you have done some of the maintenance jobs by yourself, show what you have bought and from where. If you have prepare ‘before’ and ‘after’ photos of changes.
What To Do Before The Appraiser Shows Up
There are plenty of ideas what to do and how to prepare your house for appraisal. The funny thing about these tips, is that they never really ‘raise the appraisal’, but if you do not prepare your home for appraisal, they might lower the value.
As mentioned above the appraiser is a person, they evaluate with their eyes. The look & feel is very important. Any normal person seeing a dirty house, full dusty furniture, with broken door knobs and torn curtains, will have a difficult time not to ‘punish’ the property by a lower estimated value.
So before the appraiser comes:
- Clean the drive way – first impression!
- Plant fresh flowers. Or at least water the garden.
- Send your dog (cats and even kids) somewhere else. Let the appraiser be free.
- Get rid of furniture. It will make any room feel ‘larger’ than it is.
- Open windows/curtains for fresh air and natural light.
- Close windows if there are noise hazards close by.
- Fix all small knobs, handles, bulbs, lights.
- Repaint cracked walls, clean carpets.
- Clean the kitchen! Dust the living room.
- Place nice scents at the bathrooms and toilets.
- Clear passages to attics, rooftops, basements.
- Repair any heating, cooling, electricity, sewage, damp walls etc…
What To Do While The Appraiser Is Evaluating
When the appraiser comes to evaluate the property, it is best that you are there to show around, explain and answer their questions. The appraisers time is valuable like anyone Else’s, so make sure they can reach any thing they need to check easily.
Have the keys to any locked doors, have a clear passage to the attic and basements, make sure you know where the electricity main box is, and main water installations.
Do not follow the appraiser like a puppy from room to room, leave them some ‘space’ to feel they can look freely. Be around, they might want to ask you something, so you need to be close by answer.
Have all the invoices, proof and evidence you have prepared to show what had been replaced, when and how much was invested. Prepare a file with all the information you have collected, give it to the appraiser once they have finished their inspection. Tell them what’s inside, so they will know if it saves them some of the work.
Make sure the files contain contact information of people you have talked with, so the appraiser will have an easy task finding them. Write in short (and accurate) what they have found or shared with you. The appraiser now knows that he can not give an appraisal report which is too low, without having to confront the information you have gathered.
Increasing Your Appraisal Conclusion
As you have seen there are plenty of legal ways to raise your house appraisal report. It takes some homework and investigations, but the outcome may be worth the efforts. Begin collecting data as soon as you can so you will have enough time to build a solid appraisal assistance report for your home.
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