When selling a home, most sellers want to get the highest price possible. This often leads them to wonder whether sharing details about other purchase offers with the appraiser will help increase the home’s appraised value. The short answer is no, appraisers do not take other offers into consideration when determining a home’s market value.
Appraisers are independent, third-party professionals who provide an unbiased estimate of a property’s market value. They do this by analyzing recent sales of comparable homes in the area and assessing the subject property’s specific characteristics. Appraisers are required to remain impartial and objective, so they do not factor non-market-based influences like other purchase offers into their valuation.
What is a Home Appraisal?
A home appraisal is an estimate of a property’s market value based on an in-depth analysis by a licensed appraiser. Appraisals are typically required by mortgage lenders to ensure the home is worth at least the amount of the loan being requested.
The appraiser will research recent sales of similar homes in the area and analyze the subject property’s:
- Location
- Size
- Age
- Condition
- Amenities
- Upgrades/remodeling
Based on this comparison, the appraiser provides an educated opinion of the home’s fair market value. This protects both buyer and lender by ensuring the home’s purchase price aligns with real market conditions.
Why Appraisers Cannot Consider Other Offers
There are a few key reasons why appraisers cannot take other purchase offers into account:
- Objectivity – Appraisers are required to remain completely impartial. Considering non-market factors would introduce bias into their valuation.
- Lack of verification – There is no way for an appraiser to verify that other offers actually exist or are legitimate.
- Market focus – An appraisal’s purpose is to determine market value based on recent sales of comparable properties. Non-market influences cannot factor in.
- Legal/ethical requirements – Accepted appraisal standards prohibit consideration of non-market factors that could improperly influence the home’s estimated value.
So in summary, while other offers may motivate a prospective buyer to increase their offer, appraisers must remain objective and focus only on actual market data when valuing a home.
What Information Do Appraisers Consider?
While appraisers do not look at other offers, there is some specific information they do take into account when estimating a home’s market value:
Recent Sales of Comparable Homes
One of the most important factors is how much similar homes in the area have recently sold for. The appraiser will research properties with:
- Similar square footage
- Same number of bedrooms/bathrooms
- Comparable amenities and upgrades
- Located in the same neighborhood
- Sold within the past 6 months
This provides concrete market data to help determine an appropriate value for the subject property.
The Subject Property’s Features
In addition to sales comparisons, the appraiser performs an in-depth analysis of the subject home itself. This includes:
- Property age and condition
- Floorplan and total square footage
- Number of bedrooms and bathrooms
- Site size and amenities
- Upgrades like granite countertops or hardwood floors
- Basement, attic, garages, and outbuildings
Features that improve functionality, livability, or energy efficiency can positively influence the appraised value. Deferred maintenance or functional obsolescence may negatively impact valuation.
Current Market Conditions
The appraiser takes a holistic look at the local real estate market including:
- Home price appreciation or depreciation
- Number of days homes are on market
- Inventory levels
- Interest rates
- Employment and wage growth
A competitive housing market may justify higher valuations, while a saturated buyer’s market could lower appraised values.
Can an Appraisal be Appealed?
In some cases, a home seller may feel their appraisal value came in too low. While appraisers aim for accuracy, there is some subjectivity involved. No appraisal should be taken as an absolute value.
If a seller believes the appraisal missed important details that justify a higher valuation, they do have options to appeal:
Provide Additional Information
The seller can offer supplemental information they believe is relevant, such as:
- Documentation on recent upgrades/renovations
- Photos highlighting desirable features/amenities
- Details on changes impacting marketability, livability, or value
Providing strong factual evidence allows the appraiser to re-evaluate their initial valuation.
Request a Second Appraisal
Asking the lender to order a second appraisal can provide a second opinion from a different appraiser. There is typically an appraisal review fee, but a higher valuation on the second appraisal would justify the added cost.
Negotiate with the Buyer
If a buyer loves the home, they may be willing to negotiate a higher price even if it exceeds the appraised value. The buyer would then have to pay the difference in cash or seek an alternative financing option like a piggyback loan.
Other Strategies to Increase Home Value
If a property appraises for less than hoped, there are proactive steps sellers can take to add value and appeal to appraisers on the next sale:
Make Any Needed Repairs
Deferred maintenance or neglected repairs and upgrades can negatively impact appraised value. By proactively fixing problem areas, sellers ensure their property shows at its best.
Add Curb Appeal
Improving exterior areas like landscaping, fencing, lighting, and painting create a great first impression and potentially boost perceived home value.
Update Interior Finishes
Kitchens and bathrooms should have contemporary, neutral finishes. Newer flooring, lighting fixtures, and paint colors also add value by making the home look fresh and current.
Enhance Functionality
Changes like finishing a basement, adding a bathroom, or converting a garage allow the property to better serve an owner’s needs. This can increase valuation.
Highlight Energy Efficiency
Upgrades like new windows, added insulation, and Energy Star appliances can positively influence appraised value while also reducing ownership costs.
Conclusion
While an appraiser cannot consider competing purchase offers when determining a home’s value, they do follow a rigorous methodology based on real market data. Sellers who believe their property merits a higher valuation do have some options to provide additional evidence or get a second opinion. Otherwise, making updates and showcasing the home’s best features are smart strategies to maximize appraised value on the next sale. With proper preparation and reasonable expectations, sellers can feel confident presenting their home’s fair market value to prospective buyers.
