A real estate transaction can be fraught with uncertainty, but nothing peaks buyer's and seller's stress levels quite like the home appraisal. An integral part of the sales process, and crucial for buyers who are financing the purchase of their home, the home appraisal is often the final hurdle to overcome before closing day.
Buyers and sellers are often intimidated by the appraisal process and unsure of exactly what it entails. Although they often go as anticipated, homes sometimes appraise lower than their agreed sales price. This can cause the deal to fall apart and inconveniences both the buyer and the seller.
One of the most effective ways to ensure that your home appraises for its agreed sales value is to work with an experienced local real estate agent. Knowledgeable real estate agents can help sellers to accurately price their home, ensuring that it meets its appraisal value, and the deal closes successfully.
In the meantime, here's what you need to know about home appraisals in Georgia.
What is a home appraisal?
During a home appraisal, a licensed appraiser determines a property's fair market value. Similar to a CMA (Comparative Market Analysis), a home appraisal uses various data points of recently sold homes in the area to accurately assess what it's worth — however, unlike a CMA, only a licensed appraiser can conduct an appraisal.
Home appraisals are an essential step for buyers who are financing their home purchase. A home's appraised value must meet or exceed its sale price before the lender approves the buyer's loan. This protects the lender from giving more money than the home's market value, and potentially losing money if the buyer defaults and the lender has to sell the house.
Unfortunately, if a home fails to appraise at the agreed sales price, the deal is at risk of falling through. To keep the deal together, both the seller and buyer must decide whether the buyer pays more out of pocket, the seller reduces their asking price, or they meet in the middle to make up the difference.
When does a home appraisal happen?
There are various times that buyers or homeowners may need an appraisal. For example, if you're thinking about refinancing your home, your lender will likely require an appraisal to confirm its value.
Some sellers may also have an appraisal to determine their home value before they list it on the open market. This gives homeowners an accurate idea of the optimum list price and can be especially helpful for unique properties that have few comparative properties.
Buyers typically require an appraisal after their purchase offer has been accepted. An appraisal helps to ensure that the buyer's lender isn't giving them more than the property is worth. Although less common, some cash buyers may also opt for an appraisal, too, to protect them from overpaying.
Market Value vs. Appraised Value
Although often used interchangeably, there is a difference between a property's market value and its appraised value. The market value of a home is dictated by how much buyers are willing to pay for it. For example, if there is competition between buyers, a home's market value can go up significantly.
In comparison, the appraised value of a home is determined by comparing various data points of similar properties in the area and is the professional opinion of a licensed appraiser.
For example, according to Zillow, the median home value in Georgia is $191,800, as of October 2019, and is a good indication of the median appraised value. In comparison, the median sales price (or market value) is $196,100, which is $4,300 higher.
Factors Impacting a Home Appraisal in Georgia
Home appraisals are heavily dependent on the location, size, and condition of a home. For obvious reasons, homes that are located in highly desirable areas, with very few short sales or foreclosures, tend to appraise higher than homes located in areas of declining value.
Similarly, homes that have been maintained to a high standard and need few repairs or updates will receive a more favorable appraisal than properties that require extensive work.
If you're trying to ensure that your home appraises for the highest price possible, it's crucial that it's interior is presentable and clean. For example, repairing small cracks in walls, replacing soiled carpets, and giving your home a fresh coat of paint can drastically improve its appraised value.
Here's a deeper look at other factors that influence the appraised value”
Repairs and Improvements
As home appraisals tend to increase incrementally; needing many small repairs can add up and reduce your home's value more than you expect. If you'd like to increase your homes appraised value, opt for fixes and improvements that are cost-effective but have maximum impacts, such as replacing damaged fixtures and fittings. Even small touch-ups of paint can have a positive effect on how the appraiser assesses your home.
It's also a good idea to keep an itemized list of any improvements you make to your home, including the date the repairs were made and their value. This can be useful information for the appraiser and can help bolster the value of your home.
Visible Signs of Age and Deterioration
Homes that appear run-down and outdated will naturally be valued lower than homes that are in good condition and move-in ready. Replacing aged fixtures and fittings with contemporary updates can help to improve your home appraised value.
First impressions count, so ensure your home makes a positive one on the appraiser. From tidying up your landscaping, to power washing your driveway, there are many ways that you can improve your home's curb appeal.
Does your neighborhood have excellent amenities such as a resort-style pool, or a highly rated public school? If so, be sure to let the appraiser know about it. Where your home is located and the surrounding amenities can have a big impact on its value, so make sure you have a list of positive points ready.
The Home Appraisal Process in Georgia
If the buyer is financing the purchase, their lender will order the home appraisal. This often takes place after the home inspection has been completed; however, sometimes it's completed before.
The appraiser begins the process before they even reach your home by researching and observing its location. Once onsite and walking around, the appraiser will observe your home and look out for information that will help them create an accurate appraisal report.
Typically you should expect the appraiser to spend a couple of hours at your property, but this will vary depending on the size of your home.
The main points appraisers consider include the following;
- The square footage of the home
- The size of the property lot
- The landscaping
- The age of the home
- The condition of the home
- The fixtures and fittings
- The finishings used in the home
- The number of bedrooms and bathrooms
- The layout
- Additional features such as swimming pools/outdoor kitchens
Once the appraiser has thoroughly inspected your home, they compile a report that details the features of your home. They will also use other nearby properties as comparisons to help determine your home's appraised value.
The appraisal report usually takes anywhere from 2-5 days to be completed, and until the buyer's lender receives it, the loan can't be approved. This is why it's essential to have the appraisal as early in the closing process as possible.
As the buyer typically pays for the appraisal, the report is theirs to keep, however, if there's a discrepancy between the appraised value and the agreed sales price, the seller can request to view the appraisal report.
How much does a home appraisal cost in Georgia?
According to HomeAdvisor, the average home appraisal costs between $311 and $404; however, this will depend heavily on the size of your home and the amount of time it takes to compile the appraiser report.
Most appraisers will quote you a flat upfront fee before they begin their report, so you know exactly what your costs will be.
Who pays for the home appraisal in Georgia?
The home appraisal is paid for by whoever orders it. For example, if the home appraisal is required by a homeowner who's planning to refinance, they will be responsible for the bill.
In comparison, if the home appraisal is needed as part of the buyer's lending process, it is typically added to buyer's closing costs on the closing day.
What Georgia Home Sellers Need to Know
How to Prepare for a Home Appraisal
Preparing for a home appraisal is all about ensuring that your home is in the best shape possible. Here is a quick checklist for homeowners to consider:
- Check all safety alarms are working (for example, smoke and carbon monoxide alarms) and replace the batteries if needed.
- Make easy and quick repairs before the appraiser arrives, such as sealing cracks in walls and replacing broker fixtures and fittings.
- Clean and tidy your home as thoroughly as possible.
- Prune and manicure your yard so that it makes an excellent first impression.
- Make a list of any improvements you've made on the home, as well as the value of them — you'll need this for the appraiser.
How can I boost my home's appraised value?
As most appraisers value homes in $500 increments, small cost-effective repairs can make a big difference. Here is a list of easy repairs to consider making in your home before an appraisal:
- Refresh paint in worn areas such as entranceways and remove outdated wallpaper from throughout the house.
- Clean up landscaping such as flower beds and lay fresh mulch.
- Replace broken or missing fittings such as light bulbs or electrical sockets covers.
- Make sure your home is as clean and tidy as possible.
How to Appeal a Low Appraisal
If the appraisal comes in below your expected value, and you believe it might be wrong, request a copy from the appraiser. This allows you the opportunity to look over the report and spot any errors that an appraiser could have made.
Similarly, if you read the report and don't believe the comparison properties are similar enough, or you have comparables that you think are more appropriate, present them to the appraiser. The appraiser may take these into consideration and edit the report to reflect them.
Alternatively, as a homeowner, you can request that another appraiser complete a report. Buyers, on the other hand, may need to find another lender if they're not happy with the appraisal.
What Georgia Home Buyers Needs to Know About Appraisals
Who appraises the home, and how do I know they will do a good job?
An appraisal can only be conducted by a licensed professional. If you want to check an appraiser's credentials, the government maintains a national registry.
To ensure that the appraisal is completely objective, federal regulations prohibit the seller or the buyer from personally selecting the appraiser. Typically appraisers are randomly assigned from a pool of local licensed appraisers.
What if the home appraisal comes in low?
If the appraisal comes in lower than the agreed sales price, and neither parties can find compelling evidence it should be higher, the buyer and seller typically have to return to the negotiating table.
This issue can be resolved by the seller lowering the asking price or the buyer making up the difference in cash. Often the mutually beneficial solution is for both parties to meet in the middle and compromise. This process can be expedited if you have a skilled and experienced real estate agent negotiating on your behalf.
Top Home Appraisal Companies by City
- Worth Every Dollar Appraisals: 5-star rating on Google (3 reviews).
- Crossroads Appraisal Group: 5-star rating on Google (33 reviews).
- Appraisals By Michael: 3.9-star rating on Google (59 reviews).
- Goff Appraisal Service, Inc.: 4.7 rating on HomeAdvisor (10 reviews)
- Owensby Appraisal Group, LLC: 5-star rating on HomeAdvisor (3 reviews)
- Steven A. McCormick Appraisals Real Estate: 5-star rating on HomeAdvisor (3 reviews)
- Savannah Appraisal and Consulting, LLC: 5-star rating on HomeAdvisor (2 reviews)
- Damon L Smith Appraisal Co: 5-star rating on Google (1 review)
Georgia Home Appraisal Resources
Check your appraiser's credentials: Georgia Real Estate Appraiser Licensing Board
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