The Truth About Home Appraisals: Debunking Common Myths in WA
Whether you are buying a home or putting your property on the market, an appraisal plays a pivotal role in the process. Yet, for many people, real estate appraisals often seem complex, confusing, and even arbitrary. In reality, an appraisal is a detailed assessment of a home’s value, driven by market data, comparable properties, and neighborhood specifics.
To help you better understand what an appraisal entails and avoid common pitfalls, here are four home appraisal myths you need to stop believing when buying or selling in WA.
1. The Appraiser Works for the Buyer
A frequent misconception is that an appraiser is on the buyer’s side simply because the buyer typically covers the cost of the appraisal. The reality, however, is quite different. Appraisers are hired by and report to the lender, not the buyer. The primary purpose of an appraisal is to protect the lender by ensuring the property’s value justifies the mortgage amount.
In cases where the buyer and seller have already agreed on a price, it still doesn’t influence the appraiser’s impartiality. Appraisers are bound by federal regulations, and any attempts by buyers or sellers to coerce or pressure them into inflating or deflating property values are considered illegal. This level of oversight helps maintain market integrity, ensuring a fair and objective valuation of homes for sale.
2. More Space and Extra Amenities Automatically Increase Value
While it may seem intuitive that a larger house with luxurious upgrades should have a higher appraisal, it’s not always the case. The value of a property is primarily influenced by comparable sales within the neighborhood. If your home boasts more square footage, additional amenities, or recent renovations that exceed the norm in your area, it may not receive the valuation you expect.
For example, if most homes in the neighborhood are of modest size and lack certain upgrades, the appraiser may struggle to find relevant comparable sales data. As a result, your larger home with high-end features may be appraised closer to the value of surrounding properties. Real estate agents often advise sellers to consider neighborhood norms and market trends when making improvements to maximize their investment.
3. Appraisals Are the Same as Home Inspections
Many people assume that a home appraisal and a home inspection serve the same purpose, but this isn’t true. Both processes involve evaluating the property’s condition, yet their objectives differ significantly. An appraiser focuses on determining the market value of a home, considering factors such as recent sales, overall market trends, and the property’s condition as part of their assessment.
Home inspectors, on the other hand, are primarily tasked with identifying any defects, potential hazards, or maintenance issues within the property. While both offer crucial insights to buyers and lenders, they fulfill distinct roles in the buying process. Understanding the difference between a home valuation and a home inspection can prevent unnecessary confusion and help buyers and sellers navigate their transactions more smoothly.
4. A Low Appraisal Is Final and Irreversible
A low appraisal can certainly be disappointing, especially if you’re a seller expecting a higher value. But it’s important to know that you have options. Mistakes and discrepancies in appraisals do occur, and they can impact your transaction. If you believe your home was appraised too low, you can challenge the valuation.
Sellers can request that the buyer’s lender order a second appraisal, particularly if they believe key factors were overlooked. Additionally, obtaining an independent appraisal before listing your home can give you a better sense of its market value and strengthen your position if you need to dispute a low valuation. Remember, federal law entitles consumers to request and receive a copy of the appraisal report upon submission of a written request.
Navigate the Real Estate Market Confidently
When buying or selling a home in WA, understanding the facts behind home appraisals is crucial to making informed decisions. By separating fact from fiction, you can better position yourself for success in today’s competitive real estate market.