Weekly Tip

What is an Appraisal?

When you begin the process of buying or selling a home, you may be imagining how happy your kids will be playing in a larger yard, or how pleasant it will feel to finally move to the lake house of your dreams.

But before you can settle into your new space, one thing to be completed is the home appraisal. You’ll want to have an appraisal done during the buying and selling process. But what exactly does it entail?

An appraisal is an estimate, based on unbiased research, of the fair market value of your home. Appraisals are important when it comes to getting financing for purchase. Most homebuyers need to get a loan of some kind, and most lenders are going to require an appraisal before they will lend that money to you.

Why? The house you’re going to buy functions as loan collateral. If you take out a loan for $300,000 and you aren’t able to pay, the lender needs to be sure that they can recoup their losses through the collateral. If the house you bought with that $300,000 loan is worth $300,000, the lender should be able to recover the loss.

However, say you buy a house listed at $300,000 and find out later that it’s only worth $200,000. This is a problem for both parties, as it leaves a significant deficit. While the difference in true market value and list price will rarely be so extreme, there’s still a chance that a home may be purchased for an incorrect value.

So, take the time to schedule an appraisal! An appraisal is done by a licensed appraiser not associated with either buyer or seller, and is completed after both parties have signed a contract and negotiated a price. At this point, everyone is hoping the appraised value will be as close as possible to the agreed upon price so there is no further need to negotiate. Make sure the sales and purchase agreement you have signed allows you to step out of the contract or renegotiate the price if need be.

The seller usually pays for the appraisal, which can cost a few hundred dollars. An appraisal is not an inspection, though an inspection should also be completed. This will look for issues with the home that you might have to pay to fix down the road, while the appraisal determines current value.

An appraiser will consider two things when looking at a home. When visiting the property, they will examine the quality and condition of interior and exterior items, like the roof, foundation, windows and appliances, as well as what materials they are constructed of. Amenities like central air, fireplaces and pools will add to the value, as will upgrades to the home. As a homeowner, you can let the appraiser know about any major improvements you’ve made, and make sure the house and yard are clean and neat for the day of the appraisal.

In the second part of the process the appraiser will look at comparable properties, homes in the area similar to yours that are on the market or have recently been sold, to get an idea of the true market value of the home.

It usually takes a few days to get the final report after the appraisal has been completed. Once this is done, you’re free to move forward with the next step of your home sale!

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Photo by lumaxart - 3D Realty Handshake, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=3590909

Pros & Cons of Holding an Open House

When it’s time to sell your home, you and your realtor will use a number of different marketing tactics to attract buyers and increase the chances of selling. Alongside techniques like virtual tours and the use of social media to promote the property, open houses are still a common practice. However, there are different opinions as to whether an open house is an essential piece of the home selling puzzle—and whether the benefits outweigh the costs.

Positive: Attracting New Buyers

An open house is a great way to attract those who are interested in buying a home, but don’t know how to start. These potential buyers may not have a realtor or know how to set up a showing, but seeing an open house may peak their interest. They can connect with your realtor to learn more about the process, possibly leading to a sale.

Negative: Attracting Casual Visitors

Just as an open house will attract serious buyers, each time there will be visitors who fall under the “nosy neighbor” category. Maybe someone across the street has always admired your home and wants to see the inside, or passersby are stopping in just for something to do. These visitors may not necessarily be harmful, but if this is the only interest you get, it can feel like holding an open house was a waste of time. Visitors can also include unqualified buyers, who may be interested in the property but are not able to afford it.

Positive: Preparation

If you’re still living in the home, you have to go the extra mile to prepare for your house to be shown, constantly focused on keeping things neat and tidy. Hosting an open house can be a great way to limit the number of individual showings your house may get while on the market. Rather than arranging for four or five private showings, you can prep your home once to receive multiple visitors.

Negative: Damage

Having multiple people walk through your home is an opportunity for damage to occur. This can be as minor as having dirt tracked throughout, or as major as having personal property stolen. It’s also possible that someone who walks through may be “casing” the home for a future theft.

Positive: Low-pressure environment

Because an open house is a more casual affair, visitors are able to check out the home at a leisurely pace without feeling added pressure from a realtor

Negative: Low Sale Percentage

While there is no reliable statistic for the number of home sales that come about directly from open houses, the 2014 National Association of Realtors stated that nine percent of buyers found their home from a yard sign or open house. If we limit that to just include open houses, very few homes are sold directly because of open houses.

Positive: True Feeling and Live Feedback

Virtual tours give potential buyers a visual of most angles of a home, but only by physically walking through the space is it possible to get a true sense of what the home feels like. A serious home buyer is going to want to see the house in person. It’s also great to get live feedback from multiple sources, even those who aren’t serious buyers, about the positives and negatives of the home.

The most important thing an open house is going to do is to give your home added exposure, which is imperative when selling. The more people who know about your property, the more likely it will sell. Ultimately, it is up to you as the homeowner to decide whether or not to make an open house a part of your selling plan.

Helpful Staging Tips

       

Staging is an important aspect of preparing your property for the real estate market. But how do you make your home appear move-in-ready to potential buyers while you’re still living there? Utilize the following tips to make the selling process run easier and go faster.

  1. When a home changes hands, it almost always needs to undergo a period of cleaning and decluttering. While time consuming, the process can be made less stressful if the bulk of the work is done before your home is put on the market. That way you won’t be in a rush to prepare for showings.
  2. Though it can be tempting to simply stash clutter in any available drawer, cabinet or closet, keep in mind that potential buyers can and will open many of these spaces—revealing a mess you’d planned to keep hidden.
  3. Similarly, if your rooms are packed with furniture and your closets overflowing with clothes, it can seem as though your home doesn’t have enough space, for you or a buyer. Some stagers recommend removing at least 30 percent of items from the home in order to make it appear more spacious.
  4. Once you have cleaned, dealing with daily clutter can still be a hassle. Make a checklist of tasks to complete before leaving the house in the morning so you can be sure your home will be ready for any showings throughout the day.
  5. Having children in the home can be a challenge when trying to sell. You can still let your kids be kids by turning the clean-up process into a game and having your children pitch in. Keep sizeable laundry baskets at hand to quickly stash toys, and assign a task or two to each child to help them feel involved.
  6. To keep bathrooms clutter-free, give each family member a tote to fill with personal items like toothpaste and wash cloths that would otherwise be spread around the room. When it’s time for a showing the totes can be hidden in the closet or under the sink, leaving the bathroom neat and clutter-free.
  7. Make sure to emphasize the natural light in your home. Open all curtains and blinds to maximize potential and show off all the great features of the space.
  8. Take a moment after stepping out the door for the day to re-enter your home. This allows you to get a fresh look at the space and notice things that you may have overlooked, but which potential buyers probably wouldn’t.