Today, I am sharing one of my secret weapons when I list: The Appraisal Packet.

As the spring market starts to heat up, home owners commonly will receive multiple offers above asking.  That is great to hear as a homeowner. However for financed offers, if the bank, or more specifically an appraiser, cannot prove that purchase price, you may never see that extra money in your pocket. 

Now most buyers have to include an appraisal gap to make their financed offer competitive enough to beat competing cash offers. If the property does not appraise to their contract price, the buyer may be on the line to pay cash out-of-pocket for the appraisal difference. That is why the appraisal packet is becoming more and more important.  A strategically put together packet can help both the buyer and seller feel confident the appraisal will result in the property’s highest valuation – gaining the seller the higher sales price and allowing the buyer keep more cash in their pocket.

(Click Here to Learn More About Appraisals)

On every one of my listings, no matter the price point, I make sure to put together an appraisal packet. When a buyer decides to use an appraisal gap to win an offer, I will discuss meeting the appraiser with the listing agent. If the listing agent agrees, I will meet the appraiser in her or his place with the appraisal packet. I put the packet together the day before the appraisal to ensure the most up-to-date market information. I try to personally meet the appraiser and hand deliver the packet making myself available to answer any and all questions he or she may have.

The key thing to remember is the appraiser does not have to look at the packet, or use any of the information. But why leave your appraisals up to chance? If you can give this helpful tool and the appraiser is willing to look at it, why not take the time to do it? It will also give you peace of mind later if it doesn’t appraise. You will know that we did everything possible to get the full price for your home.

There are quite a few items I put in an appraisal packet, depending on the home.  There are four main things that I think lead to success in an appraisal packet.

1. Comparative Market Analysis (CMA): The CMA is a tool Realtors use to mimic how appraisers would value the property. They adjust 3-6 sold comparable homes in the area to make your property “apples-to-apples” with others in the area.  If you have listed with me before, you know we do this at our first initial meeting.  We make sure we can prove any list price we put on the property. The CMA from our initial meeting is the same one we use in the appraisal packet. It helps appraisers understand how we came to our purchase price. If I am completing a packet for a buyer to help lower or eliminate their appraisal gap, I will often send a CMA before we submit the offer. This will help you be prepared for how the property will likely appraise. (Click here to learn more about CMAs)
2. Upgrade List: Anything and everything that could add value to the property is included on this sheet.  Appraisers don’t always have access to all the upgrades you have put in the property.  By detailing it out, it gives the appraiser an informed perspective of the value of the upgrades in the home.  Exterior and interior upgrades, from age of roof to countertops materials, are important to get any extra amount of value available from your home.
3. Competing Offers: If you have offers at or above the current contract price, make sure to include at least the first page of those contracts. I also like to write notes on why the seller preferred the current contract. This shows the appraiser that the market agrees with the current contract’s price. An Excel spreadsheet or decision matrix may also be helpful to include to make it easier to see a snapshot of the received offers rather than printing out every offer.
4. Survey:   If possible, an updated survey needs to be included in the packet. This will save the appraiser time in mapping out the home for their records. It also helps ensure the highest value for the home by detailing the lot size and any additional features.

Remember the goal of this packet is to build a strong case for the current contract’s price. Anything you can include that will help the appraiser see why the property is worth the contract amount is beneficial to include in the packet. If your Realtor is not doing this in your market, I would strongly suggest you ask them. Hope your appraisal goes well!

Contact Laura to Learn More!