What's An Appraisal and Why Does It Matter

Just because your home is under contract doesn’t mean it’s time to celebrate just yet—especially here in Hemet and the San Jacinto Valley. If your buyers are getting a loan, the next big hurdle is the home appraisal, and the results can make or break your sale.

This step is crucial because your home sale can’t move forward until the appraisal is completed and the lender gives its stamp of approval. If the appraised value comes in lower than the agreed-upon price, the lender won’t approve a loan for more than what the home is worth. That means the price you set might need some rethinking!

Home Appraisal 101

What is an appraisal?

An appraisal is a professional, unbiased opinion of a home's value that lenders use to determine if they will finance the purchase. Typically, the lender orders the appraisal, but the buyer pays for it.

Unlike a home inspection, which looks for defects like leaky roofs or faulty wiring, an appraisal strictly evaluates the home’s market value based on comparable sales in the area.

If you have an all-cash buyer, congratulations—you can skip the appraisal process entirely! That’s a big win for sellers.

Why does it matter?

Lenders need to ensure they’re making a sound investment. If a buyer defaults, the lender wants to recover their money by reselling the home. They also want to ensure the home is in livable condition and exists as described in the loan application.

What does an appraisal involve?

An appraiser will tour your home, compare it to similar recently sold homes nearby, and compile a detailed valuation report. This report considers:

• Market trends in the Hemet and San Jacinto Valley
• Supply and demand in the area
• Days on the market
• Upgrades and renovations (but keep in mind, not all improvements add value!)
• Condition, location, and unique features of the home

For condos, the appraiser will also assess the number of units in the complex, how many are on the market, and how many have sold recently.

Be Aware of Appraisal Law

A few years back, the Home Valuation Code of Conduct changed how appraisers are selected. While this was meant to make appraisals more independent, it sometimes results in appraisers being assigned to areas they aren’t familiar with. That can lead to inaccurate valuations, which is why it’s essential to work with lenders who use local appraisers familiar with the Hemet and San Jacinto Valley market.

How to Protect Yourself as a Seller

• Make sure your lender uses a local appraiser. A knowledgeable appraiser understands the nuances of our neighborhoods and won’t misinterpret local market trends.
• Consider getting a pre-listing appraisal. This gives you a solid understanding of your home’s market value before listing and can provide helpful data for the buyer’s appraiser.
• Question a low appraisal. If an appraisal comes in low, request a review to ensure all factors were considered.

What If You Get a Low Appraisal?

A low appraisal doesn’t have to mean the deal is dead. Here are some options:

• Provide documentation of home improvements. Ensure the appraiser has accurate information about updates and renovations.
• Review and challenge the appraisal. Ask to see the report and provide comparables that better reflect your home’s value.
• Request a second appraisal. You’ll have to pay for it, but in some cases, it’s worth the investment.
• Ask the buyer to cover the difference. If the market is competitive, buyers may be willing to put more money down.
• Renegotiate the sale price. If you don’t have other offers, adjusting the price may be necessary to close the deal.

The Extra Mile I Take for My Sellers

Many agents simply wait for the appraisal results to come in—but I take a proactive approach. I personally meet the appraiser at your home with a detailed packet outlining:

• A list of improvements and their costs
• Comparable sales supporting the listing price
• The number of offers received and why we chose the accepted offer

These extra steps can make a big difference in ensuring your home appraises at the right value, reducing stress and keeping the sale on track.

If you’re thinking about selling your home in Hemet or the San Jacinto Valley, let’s connect! Email me a few months before you’re ready to list, as my schedule fills up quickly. I’d love to help you get the most out of your sale with as little hassle as possible!