You might have taken all the necessary steps to give your house an elegant look. After a discussion with you, your real estate agent must have set the perfect asking price. Now, a potential buyer might have made an offer that you have accepted. You might think nothing can stop the sale of your house now. However, there is still one hurdle that you need to cross – the house appraisal.
This is ordered by the mortgage lender working with your buyer after the contract has been signed. The appraiser will then determine the value of your house. A low appraisal would mean the collapse of the sale of your house. It is, therefore, extremely necessary that you understand the possible causes of a low house appraisal.
1. The appearance of your house
If your house looks ugly or dirty, it will usually have a negative effect on your house appraisal. In order to avoid this, you can have your house cleaned both from inside and out. Make sure that certain areas such as the basement and the attic are not left out.
Such areas would need a good amount of clean-up if they have not been used for long. The yard must also be cleaned up and mowed. Get your house painted in an attractive shade and pack up the decorative items. This would make your house attractive not only for the buyer but also for the appraiser.
2. Appraiser’s disregard of the sentimental value
Your house may be worth an extra amount for various reasons. One of them might be the house being in the preferred district of the buyer. This sentimental value might not be taken into account by the appraiser. This problem is the hardest to avoid as it is mostly personal in nature.
3. Market conditions
The appraisers use comparable homes in the area known as ‘comps’ to determine a property’s value. Owing to the changing market conditions, a comp that is a month older or more becomes irrelevant. You can avoid this by researching how fast or slow the values of homes change in your area.
There are certain times of the year when the sales are slow. The end of winter or summer is one of these times. These are the seasons when fewer people are looking to buy a house.
4. Lack of recent comparable properties
The appraised value can be affected dramatically by a lack of recent sales of comparable homes in your area. It is possible that you might be living in a neighbourhood where the sale of homes rarely take place. This can have a considerable impact on the appraisal of your house.
It is also possible that you might be living in a new part of the town still being developed. So, the house appraisal can be negatively impacted owing to the lack of recent comps. Banks typically go back only three months. Good comps age rather quickly when home sales slow down.
This leaves no comps to choose from, which becomes a reason for lower appraised values. To avoid this, check out the number of home sales in your area. Look at the time of the year when most of the sales occur. You can then wait a little longer and try selling your house during that period.