How to Prepare for a Home Inspection & Appraisal
An expert realtor knows the market. They know what it will cost them to market your home and how long it will take to sell. You should interview several agents and vet them online to determine how they will represent you in the market. Often times there’s an unrealistic sale price the homeowner has in mind that is too high for the neighborhood and will generate little interest for homebuyers; a good agent can help escort the homebuyer to a reasonable opening sales price that will generate activity and sell your home. Unfortunately for the seller, if the home is priced too high, a number of buyers will not be seeing it. And, statistically, the longer the house is on the market, the more the home decreases in value. Ideally, a home should sell within 30 to 45 days, and if not, price reductions should be made.
Most states have mandatory disclosure forms the seller must complete in good faith for the benefit of the buyer. Often the questions on the disclosure form are reminders of inoperable items and repairs that need attending. Being proactive about fixing mechanical problems and construction deficiencies can position your home for a favorable inspection. It can also create a good inspection report, which can reflect on the pride of ownership, i.e. you were a good steward of your home. Some real estate professionals will advise the seller to have a home inspection up front in order to know what actual or potential problems they might be dealing with. Watch the Interview with real estate residential expert Mike Bodeen, ABR, CRS, SRES, CDPE, SFR to learn more.
When the buyer and seller agree on the sale price of the home, escrow is opened and physical inspections are ordered. The buyer generally has ten days from the date a contract is formed to complete their inspections and request any repairs – or withdraw from the agreement. The seller, once all reports and requests for repairs are provided, has five days to respond to the buyer’s request. Many inspectors are former contractors and are well-versed in the due diligence process to assess a home’s condition. Sometimes additional specialists, such as for roofs, A/C units, environmental issues or pools are brought in. But, keep in mind, the inspector works on behalf of the buyer, and therefore the buyer is responsible for paying for all inspections.
Once the inspections, often referred to as due diligence, are completed and buyer and seller are in agreement, the appraisal is ordered by the buyer’s lender. The appraisal of your home can be a price gauge for the seller, but more for the buyer’s lending institution, who will be offering the mortgage. If the appraisal falls below the agreed price, the buyer’s lending institution may balk at the sales price and the transaction could come to a screeching halt. Usually the buyer and seller will then attempt to renegotiate the price through their realtors. If they can do that, which often happens, the deal stays together and usually goes to closing. Most appraisers are looking at five basic items: the structure, interior, amenities, upgrades and the lot size/landscaping. Having the yard in good shape and the interior of the house in good order can generate a solid sales price. Appraisers are asked to support the value of the purchase price, which is why the appraised value most often comes in exactly at the same price. Through comparable sales, aka comps, appraisers adjust values based on proximity, size of home and lot, upgrades inside and out of the home and community amenities. Due to the fact that appraisers are human, having your home in “show appeal” readiness can add or solidify value to the home, whereas a home showing deferred maintenance, in disorder or dirty can have a negative effect on value.
Nationally syndicated financial columnist Steve Savant interviews top residential real estate Mike Bodeen, Accredited Buyer Representative, Certified Residential Specialist & Senior Real Estate Specialist. Right on the Money is a weekly video talk show for consumers featuring special guests in their area of expertise.