When preparing to sell their home, many homeowners will make upgrades that they believe will impact the market value of the property. But sometimes, after the appraiser comes in, the price of their home isn’t as high as they expected or wanted. They may even find themselves getting upset with the appraiser for undervaluing their home. But how much power does an appraiser have over your home’s value?
In the blog, we’ll explain your home’s market value, factors that may impact this value, how much power an appraiser has, and what steps you can take if you believe your appraiser undervalued your home. By the time you’ve finished reading, our Premier Utah Real Estate team hopes that you will feel more confident in the actions taken by your home appraiser to value your home for listing.
What Is Market Value?
Market value is the most likely price a property will receive when listed in a competitive and open market, as determined by your appraiser. The market value of a home is determined by several factors, including the price similar homes in the area are selling for, property conditions, and home size. It can fluctuate as changes in the market occur.
However, market value is different from fair market value. While the market value of your home is determined by an appraiser, fair market value is assigned by your local government and assigned by a local tax assessor to determine the amount of property taxes owed. While demand in the housing market can impact your market value, it does not have an effect on your fair market value.
There are certainly factors that can impact the amount you get for the home that is completely outside of the control of you or your appraiser but may work in your favor regardless. One of the most important factors that can impact the market value of your home is supply and demand. If ten homes are listed in your area, but 100 people are shopping for a home in the area, there is a greater demand for homes than supply can provide. When supply is limited, people may make all-cash offers or offer well over your asking price.
However, it is important to remember that these extenuating circumstances ebb and flow with the market. Supply won’t always be higher than demand, and things like increasing interest rates can dissuade some buyers from jumping into the market. The real estate market is constantly changing, and being patient through the home-selling and appraisal process is important.
What Is An Appraiser, And How Do They Appraise Homes?
An appraiser is a person working for a third-party, unbiased company who comes in and determines the fair market value of goods. These goods can include jewelry, art, heirlooms, and property. They use relevant information, such as demand for the good and prices of similar goods, to determine the value.
As we briefly mentioned above, there are a number of factors used by your appraiser to determine the value of your property. Some, but not all, of these factors, can be influenced by upgrades made to your home. Factors considered by real estate appraisers during the appraisal process include the following:
- The size of your property
- The number of bedrooms and bathrooms
- Home systems and appliances
- Size of the land and size of the home
- The year your home was built
- Curb appeal
Your appraiser, who is chosen by a buyer’s chosen lender, will come in after an offer has been made to determine whether the listing price is reasonable, given local market trends. Buyers often include an appraisal contingency in their offer, stating they may walk away if the home appraises for less than its listing price.
How Much Power Does An Appraiser Have?
So, how much power does an appraiser have? Well, the answer is that they don’t actually have much leverage to change the value of your property. Appraisers are incredibly competent and thorough people. It is their responsibility to know your home inside and out. But it isn’t just your home the appraiser knows about. They should also have a fair understanding of the market surrounding your property and factors that may impact your home’s value.
While there may certainly be appraisers on the market who have access to limited, bad, or unverified data and are working under stressful conditions that may impact their appraisal, this is not the standard in the industry. Home appraisers take their jobs very seriously and do everything in their power to assign a home its fairest value, according to current market conditions.
Can You Get A Second Opinion?
There are certainly things you can do if you believe your appraiser inadequately appraised your home; however, this does not apply to most home appraisals. To begin, you would need an adequate reason to appeal the appraisal. This reason for appealing has to be a verifiable, factual error. Whether they miscounted the number of bedrooms in your home or listed the wrong square footage, it has to be something you can point out as strictly false.
If there is no factual error in the appraisal, your case for proving the appraiser is wrong becomes much more difficult. Before continuing, you may want to consider whether your frustration over your home’s assigned value is unbiased. Of course, you want your home to be worth more. But is it actually worth more? If this is a situation where you let bias get the better of you, it is best to take a step back and accept the appraisal as correct.
If, after taking this bias into consideration, you believe your home is still worth more than it is valued at, you can challenge the appraisal. However, you must be able to point out mistakes made by your appraiser. These mistakes may include comparing similar property sales that your appraiser did not use during their appraisal, which could have swayed the value of your home. You must collect data that wasn’t provided by the appraiser.
Once this information is provided, it is sent to the lender and real estate agent, who will send it to the appraisal company and your appraiser. When the appraiser receives this information, they must respond. However, this still doesn’t guarantee your home’s value will change. Home appraisers follow the Uniform Standards of Appraisal Practice, so the information is unlikely to change your home’s market value unless there is a significant error in their report.
Selling With A Real Estate Team You Trust
The appraisal process can seem very daunting if you don’t have a real estate team you can trust to help you through the process. You should work with a team that is knowledgeable about market conditions and who can help you get the best, most accurate offer for your home possible. At Premier Utah Real Estate, our team of knowledgeable professionals is confident that we can help you get the most for your home.
We are confident that we can make the home-selling process smooth, and your family can move on to your next dream home. If you are looking for a real estate team to help you buy or sell your home, reach out to us today.