Maximizing a Home Appraisal
Whether your goal is to refinance your home or sell it, a high appraisal is the desired outcome. While there are parts of your appraisal that are beyond your control, there are a few things you can do to help the appraiser see a higher value in your home. First, you need to understand a little more about the appraisal process.
How the Appraisal Process WorksAn appraisal can be quite disconcerting. You are essentially paying someone to come into your home and tell you how much they believe your home is worth. You love your home and have made great improvements over the years. However, it’s important to keep the emotional connection you have with your home out of the picture and approach your home objectively.
Appraisers will look objectively at the following things to determine value:
- Values of comparable homes sold nearby;
- Overall market value of the home; and
- Observations made during a detailed review and walkthrough of the home’s interior and exterior living areas.
Top Factors Driving ValueThe appraiser will view some things subjectively. With that in mind, these are a few things you can do to help the appraiser see the value you added 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. Make sure you 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 like landscaping, installing wood floors or enclosing a garage. If you have plans to update a kitchen or bathroom, go small with these for maximum impact on a small budget.
Another area of concern for updates involves 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. 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 smells you do not even notice in your home.
Consider kenneling your pets. You want the appraiser as calm and comfortable in your home as possible. If he is nervous around dogs or allergic to cats, it is best if they are not there while he is working on your home appraisal.
Handling a Low AppraisalWhile you’ve put much blood, sweat, tears, elbow grease, and love into your home, those things do not always translate into value for appraisers. They have a cold, unfeeling checklist to guide them. If you get a lower than hoped for, or necessary, appraisal, you do have a few options ahead of 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 though 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 to your home and get another appraisal.