Did you know a real estate agent’s job description also includes “myth buster?” This is an industry that lends itself to a lot of assumptions, and therefore, confusion. That’s why we decided to share some common myths about home appraisals while simplifying the facts!
The home appraiser works for the buyer, or borrower.
People tend to think the party purchasing the home hires the home appraiser. In fact, the lender hires the appraiser. Think of the property as collateral for the loan. If something goes awry later, the lender gets to sell the property to repay the loan.
A home appraisal and home inspection are the same thing.
One of the more common myths about home appraisals is it is the same thing as an inspection. While both are safeguards for the buyer, they serve different purposes.
The inspection is meant to uncover potentially problematic issues. Whereas the home appraisal is an objective analysis of the market value.
It’s easy.
Just because the actual walk-through and in-person evaluation may not take long does not mean that is all there is to it. A home appraisal is a process. For example, data is gathered and examined from neighboring homes, current market conditions and the individual home specs like square footage and condition.
An appraisal provides a magic number for the buyer to pay.
The home appraisal and the list price have nothing to do with each other. However, both do start with local comps, but that is where the similarities end. Again, a home appraisal is a credible opinion of what the home is worth.
Fancy upgrades or home improvements equal more money.
It certainly looks nice to have a fully-upgraded kitchen with quartz countertops and stainless-steel appliances. Unfortunately, sellers should not expect to get a full return on investment. Perhaps it is best to keep in mind what your neighbors have done.
Remember, the appraisal is based on location and comparable data.
The bigger the house, the higher the price.
This happens to be another one of the “big” myths about home appraisals. A supersized house on an average lot in a modest neighborhood does not necessarily mean the property is more valuable.
All amenities are created equally.
To clarify, if you converted your garage into the ultimate man cave, Tiki Bar, workout room, she shed or home theater, don’t expect it to help the appraisal.
In fact, it could have the opposite effect. If no one else in the neighborhood as a home theater, but everyone has a garage, your home’s value may decrease.
Nothing can be done if the borrower, lender or real estate broker have concerns.
Any and all parties have the right to submit additional home history, ask for more details about the report or request corrections.
Summary
To summarize, the home appraisal is a straight value judgement based on quantifiable aspects of the house. Overall, it acts as a guide for the lender. The home appraisal is yet another step in the buying-selling process that is less scary when you work with an experienced Realtor!
Don’t be afraid to connect with Ryan Roberts! He is a local expert when it comes to buying and selling in Lee County, Auburn, Opelika and Lake Martin. For more real estate news, read our other blogs.
