Can an appraisal hurt the buyer?

Because of this, a low appraisal could derail a home sale or refinance. If the appraisal comes in lower than the sale price, the home buyer will not be able to borrow enough money to cover the price of the home. They'll either have to pay the difference out of pocket or renegotiate with the seller to drop the price.

rocketmortgage.com - What Hurts A Home Appraisal? - Rocket Mortgage

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There are things that can hurt a house appraisal and cause your appraisal to come back lower than you may have expected. If you know some of the things that can hurt a house appraisal, you may be able to avoid the lower valuation. Of course, keep in mind that there are some factors, like the sales price of comparable homes in your area, that may be beyond your control. Staying on top of the market conditions in your area and knowing if your home has one of these common issues can at least help you avoid the shock and know what to expect when you have your appraisal done.

Unique Or Rural Homes

If you have a unique or rural home, there’s not much you can do to change that. The reason having a unique or rural home can be a problem is that it can be difficult to assign a value to unique houses or rural properties because of a lack of comparables. There are far fewer homes in rural areas, so it may be hard to find multiple homes that have sold in the area. And unique homes are called that for a reason – no other home is like it. So how do you find similar homes to compare it to?

When appraisers come across this issue, they may have other options, like looking for comps in competitive neighborhoods, finding a fit between the top and bottom price inside the market or giving a range in value instead of an exact number. Of course, these estimates are less precise, which means the home could end up being undervalued.

Outdated Systems, Appliances and Interiors

Updating appliances or any major systems, like plumbing, electrical or HVAC, can be costly, so if yours are outdated, it could affect the overall value of the home. And if the interior hasn’t been changed for decades, it may not appeal to buyers, which can also cause the value to decrease. Outdated features like these could also signal that the home has not been taken care of properly and more issues lie beneath.

Structural And Other Construction Materials

Construction has changed over the years and builders have found new methods, technology and even materials that can make the home stronger, more energy-efficient, safer and, thus, more valuable. Some homes, particularly older homes, were built with dated materials that are now seen as hazardous. This includes things like asbestos tile and insulation and lead paint. Even if the materials are safe, if they haven’t been updated, your home may not be as energy-efficient, which could also affect value. This is especially true for old windows and doors. Roof and siding that is outdated, worn out or damaged can be pricey to fix, so that could also be a major issue that can drive down value.

What Can I Do To Prevent A Low Appraisal?

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You won’t be able to change everything in your home before an appraisal and, remember, some things will simply be out of your control. However, there are some steps you can take to help prevent a low appraisal. Prepare for your appraisal by reviewing an appraisal checklist and taking the following steps: Do your own research. This should include the current market conditions and the sale price of similar homes in your area that have recently sold, which are referred to as comps. This should include the current Provide proof of upgrades. If you’ve made upgrades to your home, show proof. Create a file that details all of these improvements and includes sales receipts. Inspect the interior and exterior of the home. This should include your major systems and appliances and note any areas of concern. If something needs to be repaired or updated, get that done before the appraisal. This should include Improve your curb appeal. It’s the first thing the appraiser will see when they arrive at your home, so start off on the right foot. It can also indicate that you’ve maintained the rest of the home as well, so if your exterior looks a little ragged, make sure you clean it up. Make sure your decor and home improvements aren’t too personalized. You’ll want a potential buyer to be able to picture themselves in the home and the appraiser will know when they’re unable to do that. Clean up messes and clutter. A clean home that’s free of clutter makes rooms look bigger and more spacious, allows the appraiser to better view the features of your home and shows that you take care of the home. Work with your agent. If you have concerns, talk to your real estate agent and see if there’s anything else you or they can do.

rocketmortgage.com - What Hurts A Home Appraisal? - Rocket Mortgage