Home Appraisal: 9 Tips to Get a Higher Valuation (& Appeal a Too-Low Assessment)

by  | BiggerPockets.com

home-appraisal

So you need to get a home appraisal — and a too-low valuation will completely tank your ability to get a mortgage or refinance for the right amount. To get the best possible assessment of your property (and to appeal a not-so-great valuation), follow these easy tips.

You’ve decided to refinance your house. Or maybe you’ve decided to sell it altogether. You want it to appraise for top dollar, but how can you make sure that happens? Maybe you’ve heard a horror story about a low home appraisal or you really need to refinance for a certain dollar amount to get back all of your downpayment on your BRRRR deal.

How do you make the most of your home appraisal?

6 Home Appraisal Tips to Get a Higher Valuation

Ask if they’re local.

When the appraiser calls to make the appointment, ask if they’re local. Real estate is local, and an appraiser from out of town may not be as familiar with the local real estate market. You want your house to be appraised relative to its location, not in relation to the local market of the appraiser from 60 miles away.

Requesting specific appraisers is no longer allowed, thanks to all those shenanigans around 2005-2007.

“Lender’s select Appraisers today by sending out an email blast to all appraisers on a lenders list. The appraiser who gets the appraisal is the one who hits the “accept” button the fastest AND who agrees to the fee the lender wants to pay. The current paradigm is: who is the fastest and the cheapest?” says John Carlson, a California Certified General Real Estate Appraiser with JCCREA.

“If you get an out-of-the-area appraiser, you can try to ask for another appraiser from closer to your area, but from what I have been told on the expert panel to which I belong, that almost never works. The lender would have to send out another email blast in hopes that a local appraiser hits the accept button first.

If a borrower does get an out-of-the-area appraiser it makes it even more important to follow your suggestions about knowing your market, most likely, better than the appraiser who is coming out.”

(Thank you John, for the correction!)

Tidy up.

You never get a second chance to make a first impression. The appraiser is only going to be in your home for a very short time — maybe an hour if you’re really lucky. Remove clutter and make the inside shine bright. Prepare it like you would for a showing — put everything away and make sure the whole house smells nice.

This is technically not supposed to help the home appraisal; however, your appraiser is going to notice if the house is a disaster. You don’t want them to walk into the property and have their first impression be “what a dump!” If the property is rented and you’re trying to refinance, make sure the tenants know to have everything as clean as possible.

If you’re selling or refinancing a property that is not tenant-occupied, the only thing to do differently than a showing is to stay put. You want to be at the home when the home appraisal is happening. You DO NOT want to follow the appraiser around like a puppy, but definitely ask if they need anything, and let them know what part of the house you’ll be in should they have any questions.

home appraisal

Look outside, too!

The exterior of your home should be clean and neat. If you are being appraised during grass-growing season, make sure the lawn is mowed and clean up dead leaves or plants. If you are being appraised during snow season, make sure the driveway and walk are shoveled.

Related: Why Appraisals Don’t Necessarily Value Homes From an Investor’s Point of View

Pick up toys, trash, and debris. Do you have a dog? Remove all that evidence, too. The last thing you want is for the appraiser to think your house is gross before they even walk in the door.

Have a list of improvements.

Home appraisals are based on recently sold homes — and what better comp is there than the exact house?

If you’ve made any improvements in the property, have a list of what you’ve done, how much you spent, and when the improvement was made. Significant improvements on a property that was purchased recently can help the appraiser understand the scope of work and encourage them to appraise higher than the recent purchase price.

Make a cheat sheet.

Measure the rooms ahead of the home appraisal and have a sheet to give to the appraiser. They will most likely still take their own measurements, but having a page from you can help them make sure they don’t miss a room.

Give an overview of the entire home, of course highlighting the positives. No feature is too small to mention, and some upgrades may not be readily apparent. Who can tell if the plumbing or electrical has been upgraded by looking at the walls?

Explain the comps.

Have your real estate agent pull comparable properties that have recently sold and those that are currently on the market. You should be staying on top of your local market anyway — seeing comparable properties to get a feel of what is selling and for how much — both before and after rehab.

Your appraiser isn’t going to be able to go into the sold houses to see what they look like — they won’t know if the home had really cheap carpeting or stunk of cats. Be prepared to give explanations of each property that has recently sold, especially those that have sold for a lower price than you are hoping for.

My neighbor was trying to cash-out refi her home not too long ago. Recently sold houses on our street had issues that weren’t disclosed on the MLS. One home sold for $45,000 less than what it should have because it had undisclosed sewer issues. Undisclosed on the MLS, anyway. The buyers were told of the issues before closing, but it wasn’t advertised on the MLS, which is where the appraiser gets their recently sold information.

Another home on my street sold for $100,000 less than its true value because the prior owner had passed away in the bathtub and went undiscovered for 12 days in August. That wasn’t shared on the MLS, either.

We typed up a sheet that played up the problem issues for each property that recently sold and shared it with the appraiser. Her home appraised for what she needed it to, and the appraiser thanked her for the additional information.

FHA Home Inspection Checklist

3 Tips to Fight a Low Home Appraisal

Appraisers are human and make mistakes just like everyone else. If your property appraises for significantly lower than you are expecting, you may be able to challenge the results.

Double check figures.

First check to make sure the property stats are accurate. Did the appraiser include all the bedrooms and bathrooms? Is the square footage correct? Did they forget the basement or misjudge the size of the lot? If you find an error, provide evidence to the appraiser and ask that they reevaluate the property based on the additional information you have provided.

If your home appraisal is slightly lower than you are hoping for, your chances aren’t as good to fight the appraisal. Again, make sure the information is correct, and you can certainly ask the appraiser to reevaluate the property. Having comparable properties to share with them can help your cause as well.

Know your neighborhood.

Even if your appraiser is local, they may not be intimately familiar with your neighborhood. School districts can change valuation significantly. If you’re located in the better school district, make sure the appraiser knows that — and included that into the valuation.

Examine comparable properties.

MLS listings on recently solds don’t always tell the whole story. If you didn’t share the backstory with the appraiser before and you have a low comp dragging down your home appraisal, make sure they understand the reason the home sold for such a low price.

Related: Is an Appraisal an Accurate Representation of Market Value?

Also make sure the comparable properties are actually comparable. Same neighborhood, sold recently, etc. It’s easy to mistype and get an entirely different location. Being off by even just a mile could drastically change valuation.

The Mortgage Hinges on the Home Appraisal

A traditional mortgage will not go through without a home appraisal — and if the home doesn’t appraise, that’s the end of the line. Unless you can prove an error in the appraisal process, you aren’t likely to sway the appraiser’s mind.

Prevent this issue from happening at all by preparing documents ahead of time that portray your property in the best light. TELL the appraiser what you want them to compare your home to by sharing a list of improvements, providing the most favorable comps and explaining the lower sales prices, and creating a home cheat sheet detailing every little thing.

[Editor’s Note: We’re republishing this article to help out readers newer to BiggerPockets.]

How have you prepared for your home appraisal?