Residential Real Estate Appraisal: 5 Common Mistakes that Homeowners Make

The real estate market has taken a bit of a hit over the past few years, and—as a result—some real estate appraisals may come in lower than expected. Of course, mistakes happen—especially if an appraiser lacks local knowledge and experience—so it’s always smart to ensure that the homeowner looks over their appraisal once it’s been completed to ensure the low appraisal value isn’t an oversight.

If the appraisal is lower than expected, it can be disheartening for the homeowner. Selling a home is a major milestone, after all, and making a costly mistake during the home appraisal process could have a huge impact on their future…and your business.

Guide homeowners to avoid these 5 common mistakes before you order an appraisal—it could save them a lot of money, and YOU a lot of anguish:

1. Not verifying the information is accurate.

Remember, your appraiser is human and we all make mistakes. It is possible for oversights to be made, numbers to be inaccurate, or people to lack the knowledge necessary to complete the job. In addition, sometimes the numbers don’t match up, for example, if you consider the gross living area (GLA) of your home. Checking the GLA on your appraisal and comparing it to a previous GLA (if you have not made any changes to your property) is always a good idea. Because of inconsistencies in rounding numbers, your appraisal may come in higher or lower than expected. Other calculations worth looking into are neighborhood boundaries, square footage, and whether or not the appraiser factored in distressed sales. Looking at this information can help homeowners to understand their appraisal better, and better catch incorrect calculations.

2. Not letting the home appraiser know about recent upgrades.

Recent upgrades can greatly increase the value of real estate property. If buyers in the local market will find certain improvements valuable, homeowners should let their residential appraiser know about them. Otherwise, they could be losing major points…and dollars! After all, they spent money to improve their home…they should get a return on that investment. If the improvements are not readily visible, an appraisal may come in low, so it’s best to share this information upfront.

3. Contacting the wrong person if there is a mistake in the appraisal.

Appraisers work for lenders, so it’s important that homeowners know to contact YOU if they find an error in their appraisal. It’s important to follow the correct protocol, otherwise, they won’t be able to make any headway in getting the appraisal corrected. They can expedite the process of securing a second appraisal by contacting their lender as soon as possible.

4. Setting unrealistic expectations.

Underestimating the cost of selling a home or setting an unrealistic price are two mistakes homeowners make when it comes to appraisals. The cost of selling a home encompasses repairs, concessions to the buyer, closing costs, and more—which can amount to about 10% of the sale price. Not accounting for this can cause discrepancies in what they believe they will be netting and what they actually get. Additionally, setting an unrealistic selling price can be a mistake. If the price that they want doesn’t match up to the market value of their real estate property, they will have a difficult time selling the property. As a seller, there is a fine line between asking for too much and asking for too little. To be successful, they need to be mindful of the sweet spot…and as a lender, you can help them find it.

5. Being overbearing or absent during the appraisal.

Neither of these scenarios are ideal when it comes to real estate appraisals. For example, if the homeowner is in the kitchen and is too chatty, it can be difficult for the appraiser to correctly assess the condition of your appliances. At the same time, not being present means that they won’t be able to assist the appraiser with any questions he or she may have. It is necessary to be present and out of the way so that the appraiser can make a fair assessment.

We are one of the most trusted appraisal companies in the Northeast, not just because of our accurate appraisals and market knowledge, but because we offer personalized customer services, expanded office hours, and a large team of highly experienced appraisers with vast local knowledge.