Selling Your Home And It Was Appraised Too Low? What You Can Do About It
Posted on: 27 May 2016
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If you are selling your home, you want to get the most money you can out of it. One factor that determines the price of your home is the appraisal. If you had your home appraised and they showed you a figure much lower than what you anticipated, below are some reasons why low appraisals happen and what you can do about it.
How an Appraisal Works
An appraiser uses two different methods to come to the value of your home. The first method is a cost approach. This means how much money would it cost to replace your home in its current location at current market rates. The next method is the sales comparison analysis. The price of your home is compared to other homes that are the approximately the same size in your area. If you come in with a much higher price, the home buyer's mortgage lender may set the price lower. One reason for this is your home would be much harder to sell, when buyers could buy another home in the same area for a much lower price.
There are other things that are taken into consideration when valuing a home, such as the location, design, and age of the home.
What You Can Do About a Low Appraisal
Fortunately, there are some things you can do about the low home appraisal. First of all, check prices of homes that have sold in your area that are comparable to yours. Just because the mortgage lender says these homes are sold at a lesser price, you need to fact check this. You may find that they are wrong and homes actually sold at a much higher price. The best way to find this information is through your real estate agent.
If you have made any type of home improvements, make sure this is included in the appraisal value. The appraiser may not be aware of the additional bathroom you added, or if you completely remodeled your kitchen. You may have updated your central air conditioning, added a fireplace, or finished a basement. Look at the appraisal to make sure these things are included. If not, give them a letter that documents all the changes that you have made.
Hire a different appraiser to get a second opinion on the value of your home. The second appraiser will look over the first appraisal to make sure it was done correctly. If they find problems, they will ask for revisions to be made or may contact the bank to obtain a new appraisal.
Make sure you take time to do all of these things so you can be sure you are getting out of your home what it is worth.
For a real estate agent, contact a company such as RE/MAX AEROSPACE REALTY.