When starting the home buying process, the buyers are often excited to find their perfect home. Whether that be based on age, size or location, they are ready to take the plunge. Unfortunately by the time the appraisal process starts the buyer’s excitement has turned into more of a “rush” to get the transaction approved. While the seller is hoping the house gets valued at what they think it’s worth, when in actuality it may not be worth what they anticipated.
Often times home buyers and sellers believe that the function of the appraisal is to set the home’s value or to confirm the selling price. This is not true. In fact there are many misconceptions about the function of an appraiser and their evaluation process.
Here are some popular myths regarding the appraisal of your client’s home to be aware of…
Myth #1 | Home Renovations
The Client Says: “The money I put into renovations or updates for my home is equal to the value you’ll add up in your appraisal.”
Fact: We know that the homeowner has put a lot of time, work and money into home renovations, but the market value added due to said renovations is based on what the typical buyer would pay for them, not based on how much the homeowner paid for them.
Myth #2 | Dead End Appraisals
The Client Says: “When my house doesn’t appraise for the listing price, there is nothing I can do about it.”
Fact: Homeowners can review the report and confirm the accuracy of the number of bedrooms/baths, sq footage etc. If errors are found, the homeowner can request another appraisal.
Myth #3 | Inspections vs. Appraisals
The Client Says: “If I’ve had a home inspection, I don’t need an appraisal.”
Fact: A home inspection determines the condition and safety of the property while the appraisal will indicate how much a property is worth. In actuality, the home inspection plays a part in the appraisal process. Don’t count out the importance of having an appraisal completed for your home!
Myth #4 | Being Trustworthy
The Client Says: “The appraiser is there to help one party in particular.”
Fact: Appraisers are trained and have agreed to be independent and unbiased. The appraiser should never be determining the value based on a number that the buyer, seller, lender or agent has in mind.
It is important to understand that not all clients are going to know the truth about your profession and your purpose. Do your best to explain to them why myths like the ones above are totally false, and that they can trust you to do your due diligence when valuing their home, or a home they are purchasing. After all, you are an essential part of their journey to buying their new home!