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Michele Harmon Team’s Guide to Home Appraisals

So, you found your dream home and now it is time to complete your closing checklist before you can buy or sell your home.  One of the last steps that must be checked off if you are financing, is a home appraisal.   You may wonder, what exactly is that?

A home appraisal is a value assessment of the home and property typically purchased by the potential home buyer.  It is performed by a certified third-party Appraiser, licensed by the Texas Real Estate Commission, to determine whether the home is priced appropriately. During the appraisal, the Appraiser will conduct a complete visual inspection of the interior and exterior of the home. The Appraiser will factor in a variety of things such as the home’s floor plan functionality, condition, location, school district, fixtures, lot size, and more. The Appraiser will compare your home to several similar homes that were sold within the last six months in your area. One perk of working with Michele Harmon Team is, unlike other agents, we always provide the Appraiser with comparables and a list of upgrades you have completed on your home to help you receive the best appraisal possible. An upward adjustment is typically made when the home includes improvements such as a deck, in-ground swimming pool, updated kitchen and baths, and many other improvements. 

The final report will include a street map of the property and the ones’ compared, photographs of the interior and exterior, an explanation on how the square footage was calculated, market sales data, public land records, and more. After the appraisal is complete, the lender will use the information found to ensure the property is worth the amount the lender is investing. This protects the lender because the home acts as collateral for the mortgage. If the buyer defaults on the mortgage and goes into foreclosure, the lender generally sells the home to recover the money borrowed.

What Homebuyers Need to Know

As previously mentioned, if you are buying a home and are under contract, one of the last steps of the closing process will be the appraisal. This step is extremely important. If the appraisal value is equal or greater to the contracted sales price, the transaction proceeds as planned. However, if the appraisal comes in below the contracted sales price, it can delay the transaction. 

Most likely, neither you or the seller will want the transaction to fall through.  As the buyer, you have an advantage because the low appraisal can serve as a negotiating tool to convince the seller to lower the price. Unfortunately, the bank will not lend you or any potential buyer more than what the home is worth.

Despite the fact that appraisals prevent buyers from overpaying for homes, a seller may feel that a low appraisal is inaccurate and may be reluctant to drop the price. Michele Harmon Team can present a factual case for a higher value to the original appraiser. If the seller chooses not to drop the price to the appraised value, your options include: bringing cash to make up the difference between the contracted sales price and the appraised value or you can try to arrange an agreement with the seller to meet in the middle. Meeting in the middle will result in you bringing half the difference with cash and the seller reducing the sales price by half the difference.

What Sellers Need to Know

A low appraisal, if accurate, may force you to lower your home’s price in order to get it sold. Waiting for an all-cash buyer who does not desire an appraisal is rare. No one wants to overpay for a home. If your area has had recent distressed sales, it can lower your home’s appraisal value. However, if you feel that your home’s value is being dragged down by the sales price of nearby foreclosures and short sales, Michele Harmon Team may be able to convince the appraiser that your home is worth more. If your home is in significantly better condition than those properties, because Michele Harmon Team will go the extra mile in providing data to the Appraiser.

Key Takeaways

  1. An appraisal is an unbiased professional opinion of a third-party appraiser about the value of a home. It is used when a mortgage is involved in the buying, refinancing, or selling of a property.
  2. An appraiser creates a report based on a visual inspection that includes recent sales of similar properties, current market trends, and aspects of the home to determine the property’s appraisal value.
  3. The appraisal fee is always performed at the buyer’s expense.
  4. When the appraisal is lower than anticipated, the transaction can be delayed or canceled.

Interesting Facts

  • If a seller chooses to have the home appraised to help decide on a value, the same appraisal CANNOT be used by the future buyer’s lender.
  • Lenders CANNOT hand pick the appraiser. Lenders order an appraisal and a pool of appraisers have the option to select the job.
  • According to, home improvement projects that typically receive the highest expected return are attic insulation, manufactured stone veneer, and garage door replacement.
  • Although there are similarities between a home appraisal and a home inspection, they are not the same. A home inspection determines the condition of the property and an appraisal indicates the value.

The Bottom Line

Michele Harmon Team is here for you to ensure the closing process goes smoothly. When everything goes as planned, the home appraisal is simply another box for you to check off your closing checklist. Your understanding of appraisals can only work in your favor. Especially if you are buying or selling your first home. 

Do you have any questions about the appraisal process or are you ready to buy or sell a home? Contact Michele Harmon Team today at 713-818-1330. We are always here to help.

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