Reappraising the appraisal process

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So you’re placing your home on the market. This can be an emotional time because your home is where your family memories were made. In your eyes, your home may be worth one number, but in the eyes of an appraiser, that number often differs. And that second number can have a powerful impact on the price your home actually sells for.

One of the biggest misconceptions is that the appraiser works for the buyer. The truth of the matter is the appraiser is hired by and works for the mortgage company. They are sent out as an independent third party to give an unbiased price evaluation on the property.

Many people think the appraiser automatically gives the sales price number. The appraisal is a professional assessment based on previously sold property within a certain radius of your.

What happens when the appraiser’s number is lower than the sales price? Most sales contracts have a clause releasing the buyer if the appraisal price is lower than the sales price. And most of the time, the lender will not give the buyer a mortgage if the appraisal price does not match or exceed the sales price.

The buyer also has the option of increasing their down payment to match the difference on top of their original down payment amount.

Many times, the only option is for the sellers to lower the sales price down to the appraisal price. I always recommend to sellers that they appealing the appraisal: Your attorney or Realtor can assist you with this.

Don’t confuse the appraisal process with a home inspection. That being said, there are certain items that the appraiser will look for which may need to be corrected prior to closing.

These are usually major health-and-safety issues but not always. If the buyer is going for an FHA type loan, they may look a little deeper. The appraiser will take into consideration the condition of the home along with the location and square footage among other factors in determining a price.

It’s often hard for a seller to wrap their head around the value assigned to improvements you have made. What do you mean my $20,000 patio isn’t worth $20,000 extra on top of the appraisal? The appraiser will look at data from homes sold near yours and base the value of improvements on that.

In the area where I was raised, there are larger homes built on smaller lots surrounded by original smaller-sized homes. Although these homes may be two to three times the size, it doesn’t mean they will necessarily appraise out for that much more.

The appraiser will always use the same size home whenever searching for comparable properties. If there isn’t enough data though for the appraiser to use, he may have to make accommodations by using a smaller square footage property and increase the value slightly.

Some appraises may believe larger homes bring with them a nuisance factor. Larger home will have a larger expense when it comes to heating, air conditioning and upkeep.

Ask your Realtor during the initial consultation,what their opinion is of the appraisal price. Your broker will be able to search the Multiple Listing System for comparable properties, which is the same data an appraiser would look at.

To contact me, call 847-292-4700, email or visit

About Giuseppe Zerillo

Giuseppe Zerillo is the managing broker and owner of Zerillo Realty Inc. He is active on many boards, serving as village trustee of Harwood Heights and corporate secretary for Casa Italia. In 2011, he received the IANU Foundation's 2011 David Award for outstanding promise in the field of real estate, and in 2012 he was honored by the Illinois State Crime Commission for his community outreach. Constantly seeking opportunities to give back, he donates to several charities and raises money for children with disabilities.

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