Should You Use An Appraisal Management Company When Selling Your Home?

Posted on: 26 May 2015

If you've begun to take steps to prepare your home for sale, you may be nervous about the upcoming appraisal. Not only will this value assessment help determine your home's listing price, it will also set the maximum amount potential buyers will be able to borrow against your home without additional collateral. And with recent federal regulations governing "arms length" real estate transactions now being strictly enforced, many lenders have opted to partner with appraisal management companies (AMCs) to ensure that the appraised value of a home is truly accurate and verifiable. Read on to learn more about what you should do before seeking an appraisal, as well as how enlisting the services of an AMC for your appraisal may help the final sale go more smoothly.

What is an AMC?

AMCs have begun to boom in popularity since the Great Recession, after a number of banking laws were changed to prohibit artificial price inflation and ensure transparency and accountability in the appraisal process. AMCs employ a number of certified real estate appraisers, and are contracted on behalf of the owner or buyer's bank to ensure that there are no conflicts of interest in the appraisal transaction. In addition to the federal appraisal regulations, AMCs have additional rules for their appraisers that can help you, as the seller, know exactly what factors went into your appraised amount.

One advantage of having your lender enlist an AMC in appraising your home is the knowledge that this appraisal is independently verifiable and should be accepted by other lenders as an accurate value for your home. This can help future sales transactions go more smoothly, as well as reduce the borrower's expenses (giving you more room to negotiate on the back end).

What should you do to your home or property before seeking an appraisal?

You may wish to find out if your lender has a preferred AMC to determine which factors will go into your appraisal -- this can help you know which changes and fixes are most important in assessing the final value of your home. But in general, you'll want to perform as much deferred maintenance as possible before seeking your appraisal, as any changes made afterward may require an additional appraisal at full cost. If you've been putting off fixing a nagging but not crucial problem (like an unfinished third bathroom, or a warped baseboard), now is the time to fix it.

The process of preparing your home for sale should include repainting any rooms with older or brightly-colored paint in eggshell or a neutral color. You'll also want to declutter -- remove or rehome "piles" of anything (books, papers, or toys) and oversized furniture, as these can make rooms look and feel much smaller. If you're planning on hosting open houses after the appraisal, you'll likely also want to remove any personal mementos or family photographs. If possible, these touch-ups should be done before the appraisal takes place, as they will help your home be more photogenic and appealing to potential buyers.

What information should you or your realtor provide to the AMC?

The AMC's appraiser may contact you or your realtor prior to the appraisal for some background information on the square footage of your home, the year your home was built, and whether there were ever any additions or structural modifications made. However, even if you haven't been contacted, you're free to provide this information directly to the appraiser. This can reduce the amount of background work the appraiser needs to do and can help you highlight any added features of your home that may not stand out to the naked eye.

For more information, contact appraisal management companies in your area. 

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