Most banks require an 80% Loan to Value (LTV) ratio in order to lend a borrower money. The LTV ratio is calculated by dividing the mortgage amount by the appraised value. So you can see just how critical it is to ensure an appropriately high home appraisal. Low appraisals are becoming a problem for prospective homebuyers around the country now that we’re seeing a recovery in the housing sector. Homes are selling for more these days, but old sales prices might not be enough to justify the newest deals.
Appraisals are generally performed by a third-party vendor so as to get an unbiased assessment of the property. The appraisal is based on a number of factors, including comparative listings and the condition of the property, and most appraisers spend around 30 minutes touring the house.
Since the appraiser won’t be spending much time at your property, you may want to help bolster your home’s appraisal and ensure that the value comes in where you need it to be.
1. Provide Comps
If you’ve been around real estate long enough, you’re bound to hear this term being thrown around. Comps refer to similar — comparable — properties in your neighborhood that can be used in a price analysis. Instead of relying on your appraiser to find his or her own comps though, use a site such as Redfin or Zillow and pick out listings in your area that are at or above your desired appraisal.
There’s no guarantee that the appraiser will use those comps, but offering them may help ensure the appraisal value you want.
2. Make a Big First Impression
Whether you’re a renter, buyer or even an appraiser, first impressions are huge in real estate. Make sure that your house is clean and tidy for the appraisal. If you live in a single-family home, don’t forget about the outside of your home. Curb appeal is very important.
This might all seem like common sense but you’d be surprised how many people leave dirty clothes on the floor and neglect to make their beds. Things like that won’t make or break your appraisal, but it could have an impact if you’re on the bubble.
3. List Your Improvements
If you’ve made improvements to your home, it’s a good idea to list them on a sheet of paper for the appraiser.
Even if you haven’t made any repairs or upgrades during your time at the property, you can still list all of the features of the home. Make sure to include things like central heating and air, stainless steel appliances, hardwood floors, etc.
4. Don’t Overwhelm the Appraiser
The last thing you want to do is be too pushy when it comes to your home appraisal. So once you’ve handed off the pertinent documents, back off and let the appraiser go to work.
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