Whether you are looking to refinance or sell your home, a high appraisal is the desired outcome. While there are some things related to your appraisal that are beyond your control, there are a few things you can do to ensure a higher value in your home. It's important to first understand the appraisal process.
How the Appraisal Process Works
An appraisal is an unbiased estimate of the value of your home..
These are a few of the things appraisers are looking at that will impact the appraised value.
- Values of comparable homes sold nearby.
- Overall market value of the home.
- Observations made during a detailed review and walkthrough of the home’s interior and exterior (this part is often documented with photos to support the appraiser’s valuations).
The process also involves a checklist that appraisers use to help determine values. This creates a level playing field for all homeowners with some items being assigned specific values.
There is room for interpretation by appraisers, which is why it is important to make sure your home is presented in its best possible light to boost the appraisal value.
Top Factors Driving Value
There are a few things you can do to help the appraiser see added value in your home.
Improve its curb appeal. First impressions matter in both selling your home and appraising it. You want to present the best possible image of your home to the appraiser. Spruce up the lawn, cut the grass, trim the trees, and properly prune shrubbery, so the property presents an optimal first impression.
Choose updates wisely. When updating your home with an appraisal in mind, experts recommend choosing projects that offer the best return on investment. These includes projects like the following:
- Installing Wood Floors
- Enclosing a Garage
If you have plans to update a kitchen or bathroom, go small with these for maximum impact on a small budget.
Other aspects to keep in mind are the location of the updates. Updates to the basement of the home have a lesser impact on appraisers than updates to the attic. Finishing a basement does not increase the overall square footage of your home while converting an attic into a bedroom does. The difference in the numbers is that attic renovations recover 73 percent of the costs in the appraisal while basement renovations only recover 66 percent of the costs on average.
Document updates. This is more important than you may realize since some updates have a more visual effect than others. Updates like new roofs, electric system upgrades, and even updates to the heating or air conditioning in the home are not aesthetic improvements, but can offer significant increases in appraisal values.
Offer the appraiser before and after photographs along with copies of receipts and other documentation regarding the upgrades.
Clean everything. Consider a professional cleaning of the home, carpets, and everything in between. You want to make sure the house looks and smells clean, and a little extra help never hurts – especially for pet owners. Carpet and upholstery cleaning can help clear the air of pet odors.
Handling a Low Appraisal
If you get a lower than expected appraisal, you have a few options available to you.
If you are selling your home, you can work with the buyer by lowering your asking price, or having them increase the cash component of their offer. You might have to split the difference and meet in the middle.
If your goal is to refinance your home, you’ll have to do one of three things.
- Accept the presented offer even if it is less than you would have liked.
- Point out potential errors in the appraisal in hopes of raising the proposed value. Bring facts, figures, and comparable home values in the neighborhood to the table when doing so and present a compelling argument.
- Make further changes or improvements to your home and get another appraisal.
While there are no guarantees when it come to home appraisals, the advice above may help you have a better than average appraisal experience.