What Increases (and Decreases) The Appraised Value of a Home?
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During the home selling process, you will likely work with an appraiser who evaluates the value of your home. Their job is to make sure that you the buyer isn’t overpaying and potentially putting the holder of the mortgage at risk. If you ever decide to refinance your mortgage you'll get to meet an appraiser for that as well.However, it is always in your best interest to help the appraiser see your home in it's best light. The higher the appraised value, the better.Let’s explore what elements you control when your home is being appraised and realistic steps you can take to increase its value.
1. The Size and Accessibility of Your Lot
A good appraiser will start by walking your lot to make sure it matches the description on the deed. As a homeowner, you can help by making sure this space is accessible. Clear away any brush that could block your lot or make it seem smaller than it is. You can also use this time to improve the quality of your landscaping and property access. Dispose of dead or dying trees, remove broken fence posts, and remove large rocks. The better shape your parcel is in, the easier it will be to properly evaluate.
2. The Exterior and Interior of Your House
While most appraisers follow a strict set of guidelines to determine the appraised value of a home, it’s important to remember that these people are only human. A clean, well-presented house will likely have a higher value than a poorly maintained house in a similar location. If you think about it, this appraisal isn’t just based on a rigid mathematical calculation. The appraisal process is an art and not an exact science - make sure your home shows well, smells well, isn't cluttered and information on your major systems and their age is readily accessible.Set aside a few projects that make your home look more presentable. This could involve simple steps like pressure washing the exterior or deep cleaning the carpet, or you could decide to repaint and replace the flooring entirely. These steps increase the appraised value of your home as well as increase the actual home value. They make your home more “move-in ready” which more people are willing to pay for.
3. Buying Trends & Comparable Sales
Obviously the biggest factor in your home's appraised value will be comparable home sales. If your neighbor's home is similar and they just got a great sales price...that "comp" will affect your home's value. Sometimes appraisers may not have access to as many new and relevant comparables as your real estate agent. Frequently, appraisers lean on the expertise of a solid agent to be sure that the sales comparable list is up to par. Ask your Realtor to engage with and be available for the appraiser so that they may answer any questions that come up. Covid-19 has influenced the wish-list for many new homeowners. A few buying trends have emerged; larger homes with room for a home office and gym are on fire. Homes that are close to the beach or have a pool offer a valuable quarantine reprieve.
4. Hot and Cold Markets
The housing market plays a significant role in the value of your house. In a weak market, houses aren’t moving, and the appraiser might have a difficult time finding relevant sales. They may need to go outside your neighborhood or further back in time to find a good comparable sale. This isn't currently a concern - most homes are selling quickly across the US...but if interest rates increase, this could become an issue.Remember, home appraisals take a rear-view-mirror approach...they are looking at the past for evidence of present value. This is inherently flawed, you can see this play out in really hot markets. The housing market can change in just a few months, perhaps a new employer comes to town or an external change in the neighborhood causes a change (zoning changes, new infrastructure, nearby developments, etc.) and if your appraiser is only looking at old data when they factor the current value then your home’s appraisal could come in low. This is where having a competent real estate agent by your side can be a big help.
5. Rushed Jobs and an Appraiser Shortage
Even if you present your house in its best light, you might not get the value you want if your appraiser is in a hurry. The refinance boom is stretching appraisers thin. In some areas there aren’t enough appraisers in the area to make up for the increased demand. As a result, your appraiser might have more homes that they need to evaluate in one day, meaning less time is spent focused on your house. A good agent can help make the appraiser's job easier by pointing out relevant comps and making sure that they have unencumbered access to the home when it is most convenient for him.While your appraiser will do everything in their power to prevent human error from affecting the appraised value of your home, you could end up with a lower value simply because your appraiser is in a hurry.
6. The Presence of a Real Estate Agent
You might not realize it, but the mere presence of a real estate agent can better help you get an accurate appraisal of your home. Real estate professional understand the industry and can navigate paperwork, offers, and counteroffers. Find a top ranked realtor® through effectiveagents.com and be sure that your interests are well represented.Some people have seen homes receive lower appraisal values because of missed comps, inaccurate square footage or even inaccurate condition assessments. Unfortunately, once a home is appraised, there’s not much of a chance that the appraiser will change the value. It’s worth the time and effort to get the appraisal right the first time.
Discover Other Ways to Increase the Appraised Value of a Home
If you’re ready to put your home on the market and want to get the best offer possible, work with a Realtor® who understands your neighborhood and your specific housing situation. When you contact Effective Agents, we will use data to identify top real estate professionals who understand what you need. You can consult with one of our Realtors® to get their top tips for increasing the appraised value of a home so you can get a strong offer once you sell.