How to Enhance Your Home’s Appraisal Value
There are a number reasons you may need to get your home appraised. Financial institutions often need verification of the value of a home that you intend to finance through a mortgage. It may have to do with litigation, divorce or for tax purposes. Except in rare cases, you want to maximize the value of your home for the appraisal. Here are a few things you can do to get the best value in an appraisal.
Appraisers look at the home and the permanent fixtures of a home, not a clutter that can be picked up, however, a clean home will leave a better impression on an appraiser trying to assess the condition of the home. Remember, spending hours cleaning your home for an appraisal may be a bit of overkill. A modest clean up involving removing clutter, sweeping or vacuuming, making beds and providing access to places in the home an appraiser may need to see, i.e. attic, external basement opening, and electrical boxes should be adequate.
Enhance Curb Appeal
Curb appeal is always critical when assessing a home. Again, this does not have to be an extensive task. A new coat of paint, a new roof and landscaping the whole yard will definitely improve the curb appeal but isn't always necessary. Simply mowing the lawn, removing weeds and cutting back overgrown plants or shrubs can go a long away. It is also a good idea to remove clutter and wash large stains on the home or driveway with a power washer. If your capabilities are limited, concentrate on the front yard instead of the backyard. The front yard gives the first and most crucial impression.
Keep an itemized list of all the structural updates. This can help an appraiser keep track of any improvements made to the home. Make sure the updates are significant and permanent. Small improvements like replacing a door knob will likely not improve the value of the home so there is no need to list it. Changing all the door knobs or doors may or may not be important so be judicious in the renovations. Finding out what adds value can be daunting and what ultimately impacts the value will be decided by the market comparables. Make sure the improvement is to the structure of the home. While a new area rug or sofa may change the appearance of the home it is not a permanent fixture and doesn't add value to the home. Finally, document any additions or conversions to non-living space, such as the garage. Addition of a garage space can add significant value to your home. The appraiser may be getting the size of the home from city hall records or previous listings for sale. They may not be aware that additions or conversions have been made and may be conducting the evaluation assuming an incorrect size to your home. Good appraisers will generally measure the size of the home, but not always.
Locate Comparable Homes
Most residential appraisals are done with the direct comparison approach. That means that your home is compared with other homes (called comparables) that usually have sold recently in your area (normally within the last six months). Your appraiser should check thoroughly through your neighborhood to find the most relevant comparables – ideally between three and five homes. But it does not hurt if you make the appraiser aware of homes that have recently sold in your neighborhood. The same size home that is the same age on the same size lot in the same condition and next door to yours would be the ideal comparable. Unfortunately that home usually doesn't exist and even if it did, it would be unlikely that it has recently been listed or sold. Usually comparables are sought and some adjustments are made to account for the difference. The appraiser will determine which comparables are most relevant and how much to adjust the variations between homes. If you do find a comparable make sure you understand the difference between a list price and sale price. Appraisers usually only use comparables that have sold and they will always put more value to the selling price than the listing price. A person can list their home for whatever price they want, it does not mean that somebody will buy it for that price. That's why the price that a property sells for is more relevant. A professional real estate agent can assist you in obtaining comparable homes for a comparison.
Make Improvements Cautiously
If you're planning on making any improvements or planning to do any renovations, do so cautiously. Improvements don't always add value and if they do they don't increase value over the amount invested. Investing $60,000 does not always increase the value beyond the amount spent. In fact, it rarely increases over the amount invested. Usually you only recover a percentage of the money you have invested. The best improvements are generally painting, flooring, replacing lighting fixtures and plumbing fixtures. The rooms that add most value are considered to be kitchens and baths.
Don't Rely on Gov’t Agency Valuation
Assessments done by government agencies are usually used to assess your property taxes. These assessments can give you a general idea of what your home is worth or they can be completely off. Assessments, in most jurisdictions, are done through a computer model. The accuracy of the assessment usually depends on the data that the computer model uses. The age old adage of garbage in, garbage out applies. If the model has relevant and accurate data it can provide an accurate assessment. It should be noted that a computer model does not view the inside of your home, therefore, it is hard for it to distinguish or compare it to the most relevant comparables. Another factor that can affect accuracy is when the assessment is done. A lot of jurisdictions will use data from the summer where there is generally an upswing in value and volume. This provides the assessment entity with more data but the assessment can be higher or lower depending on how the market has changed.
Finally let the appraiser do their job. Give them space to do their inspection. This is, generally, not their first appraisal and they know what they are looking for when inspecting the home. You don't want to annoy them by pointing out details they may not find relevant. There can be a fine line between being informed and being a know it all, you don't want to cross the line.