HERNDON, Va.It is no secret that the housing market is in a state of flux. Houses are staying on the market longer, mortgage interest rates are rising, and house prices are falling in some areas. It is more important than ever for sellers to understand what their house is worth in this fluctuating market.
The American Society of Appraisers (ASA) recommends sellers fully understand the appraisal process and how it can help them make decisions about the home.
Many homebuyers and home sellers dont know much about what goes into an appraisal or how a value opinion is developed, said ASA real estate property appraiser Mike Evans, a Fellow of the American Society of Appraisers. Homeowners dont know that the appraisal report can be helpful to them in the future.
ASA offers the following advice to homeowners to educate them about what is in an appraisal report, why everyone should request a copy, and how it can help in the future.
Know what types of information the appraisal report includes. The report includes details about the house, side-by-side comparisons of similar properties, an evaluation of the real estate market in the area, notations of major problems with the property that will affect its value, an estimate of the expected time it will take to sell the property, description of the area, and the neighborhood, etc. Reading the appraisal report will teach homebuyers important things about their property and how it fits into the market.
Learn how an appraisal report is developed. Appraisals are opinions of value. Residential real estate appraisals use a Comparison Method, which compares your home to similar homes that have sold, to come up with an opinion of value. A residential appraisal gives summarized and concise information about your house and is not the same as a home inspection.
Request a copy of the appraisal. When you bought your house, you paid for an appraisal. If you didnt request a copy of the appraisal at the time, go back and request it from your lender. It is your right under federal law to obtain a copy of the appraisal report. Make sure you get one from your lender.
Before you think about selling, review the appraisal report that was created when you bought your house. Look for things in the appraisal report that had a negative adjustment. You may want to look at updating or remodeling those areas. Examples of areas that might have caused a negative adjustment are: having less than the typical number of baths for houses of a similar size; kitchens and baths that are outdated; or a one-car garage or no garage in a neighborhood of two- and three-car garages.
Get your house appraised before you put it on the market. In a market that is fluctuating quickly, you may want to get an appraisal before you put your house on the market. That will help you price it and help ensure the house will appraise for your asking price. Many sellers are shocked when their house appraises below the asking price and, either their deal falls through, or they have to reduce their asking price.
ASA reminds consumers to hire a qualified and professionally certified appraiser. For information about the real estate appraisal process, or to find an accredited appraiser, log on to www.appraisers.org/consumers or call 1-800-ASA-VALU.
From the Aug. 23-29, 2006, issue