Whether you’re buying or selling real estate, an accurate appraisal is key to the transaction’s success. When the appraisal is not right, the whole deal can end up going sideways—leaving all parties frustrated.
To help you better understand and get ready for a home appraisal, we talked with Brian Quinlan, chief appraiser for Prosperity Home Mortgage, LLC.
Here are three things that buyers and sellers need to know about appraisals.
The sellers’ agent can provide helpful information directly to the appraiser. For home sellers, your real estate agent serves as your advocate during the appraisal, and the information they present to the appraiser at this time is critical to your success. Quinlan recommends that sellers work with their agents so they are equipped to provide the appraiser with the following items:
- Detailed list of home improvements and renovations, including the associated costs and dates completed
- A copy of the plat or site plan, noting unique or desirable features
- Nearby sales and listings that were examined when pricing the property for sale, noting any outliers
- Be mindful to the term “comps” – remember it stands for comparable and it is the appraiser’s job to determine which sales and listing are comparable for their report
- Specific transaction details, including whether there were multiple offers or special concessions
Armed with that knowledge, as well as information about the area’s market conditions and buyer demand, your Realtor can reinforce the value of your home to the appraiser. “That’s the real power of a real estate agent—they know things about the property and the market itself that the appraiser may not,” Quinlan said.
You can vet the appraiser before the actual appraisal. Homebuyers choose their mortgage lenders, and lenders pick the appraisers. If you are homebuyer, ask your lender what qualifications and credentials they require of their appraisers. Likewise, the seller’s agent can ask the buyer’s agent about these requirements on their clients’ behalf and verify the appraiser who is hired has those credentials.
At Prosperity, Quinlan explained, they source local appraisers who have a greater understanding of the markets where they will assess properties. They want appraisers who have a certain number of years of experience in that market—usually five at a minimum—and a prompt turnaround time for appraisals, among other qualifications.
Remember that appraisals are not high or low; they are right or wrong. “Low would imply that the sales price is right and the appraisal is wrong,” Brian said. “When appraisals are wrong, the lender should have a process for them to reconsider.” At Prosperity, they employ technical reviewers who examine every report to help ensure its accuracy. If borrowers object to the results, they will work together to resolve the issues.