Selling Your Home: Understanding the Appraisal Stage

Our job as realtors is to guide our clients through the intricate process of selling their homes. One crucial stage that can sometimes be overlooked or misunderstood is the appraisal process, which occurs after the buyer's option period/inspection period and plays a significant role in the home selling journey.

Once the option period has ended, and the buyer has committed to purchasing the property, the lender will order an appraisal to determine the home's value. This step is essential for both buyers and sellers as it ensures that the property is priced accurately and fairly.

When the buyer is using cash or a conventional loan, the appraiser's primary focus is to give an opinion of value based on the home's current condition. However, if the buyer is using an FHA or VA home loan, the appraisal process can be more rigorous. In addition to determining the home's value, the appraiser also acts as an inspector to verify that the home meets a list of criteria set by the regulations of those loan types.

These criteria can vary but often include ensuring that there are no safety hazards or major issues with the property. In the past, appraisers have requested repairs such as cutting back trees from the roof line, replacing broken electrical plates, ensuring there is no exposed sheet rock, installing GFCIs in required areas, and providing a permanent heat source in garage apartments, among other things.

This is why it's crucial for sellers to consider how the buyer is paying for the home when reviewing offers. If the property has issues that would flag on an FHA or VA loan, the homeowner may be required to complete repairs before closing the deal with that particular buyer. It is not like the buyer's inspection report where the terms are negotiable, if you want to close with that particular loan type, the appraiser's flagged areas would need to be remedied. 

Once repairs are completed, the appraiser will come back out to verify and submit an updated report to the lender. 

When you are selling a "fixer upper" home, most of the time you want to work with a cash buyer or a buyer who is qualified for a Conventional Loan, otherwise you are completing beneficial repairs prior to closing out of your own pocket. It's possible those are valuable items that could have helped the home sell for more to a wider audience of buyers because the home would have less issues. It's possible, and each homeowner has a different story and needs their own custom strategy. 

It is so important when you are selling your home, to educate yourself, or partner with a Realtor who will help to educate you from what they know and what they have learned. Sure, you could just hire a successful agent who does a great job of selling homes, and learn nothing except they're great at their job.. or you could hire a successful agent who takes an educational approach in their business to ensure the success of this transaction, and open your mind up to the potential of your real estate portfolio. 90% of Millionaires became so through real estate, not buying and holding one home forever, buying and selling and growing their portfolio. 

Real Estate is a layered cake, and I have learned so many things through buying my first home at 23, and now having been licensed as a Realtor for 5 years. This is a brief peek into appraisals when selling your home, there is so many more topics to learn about. Whenever you would like to strategize with an expert and move beyond reading articles, call us. 

We would love an opportunity to interview for you and represent you and your property at a high caliber while taking an educational approach. Whether you decide to become a Realtor yourself or have a successful real estate portfolio, I want to witness your success story!

Clarissa Woodward, Galveston & Follet's Island Realtor, IBC (409)877-3916

Joseph Casazza, BOI (907)978-1083