A home appraisal is an opinion-based valuation process conducted by a qualified appraiser. Many factors can hurt a home appraisal and affect the appraisal value. The appraiser derives an approximate home value before buying, selling your older home or refinancing. They prepare an appraisal report based on the size of the house, condition, floor plan and amenities, comparing similar properties being sold recently and the current market trends.
Who needs to have a home appraisal, then? If you are a buyer, seller or refinancer, you will need a home appraisal for the real estate agent and potential buyers to know its worth. A home appraisal is also a process to determine property taxes.
A home appraisal helps set the listing price so your home’s buying or selling process gets easier.
Hundreds of other things can affect your home valuation, but the basic factors impacting appraisal should be good when you plan to sell your house or property.
5 surprising factors that can affect your home’s appraised value.
1. The Age factor
The older the house, the more likely it is to have wear and tear that can affect its value.
If you look at home sales in your area, you’ll likely see a trend toward newer homes, which are likely to have fewer problems and last longer.
To boost the value of your home, you can replace cracked or rotting wood, update appliances, repair broken windows and paint or stain the interior.
If your home was built more than 30 years ago, it might have a less desirable foundation. Common foundations from the 1970s, 80s, and 90s include slab, crawlspace, pier, and beam. The newer the foundation, the more likely it is to be energy-efficient, durable, and safe.
You can offset this with repairs and renovations if your home has a less desirable foundation.
You’ll want to keep in mind that you need to stay within code when making repairs that affect the health and safety of the home. Double-check with your local municipality to ensure you’re not violating any codes, especially if you plan to work on the exterior. For example, if you want to replace your asphalt shingles with a different type of roofing, you may need a permit from the city.
The location of a house or property can be the deciding factor for any buyer, as it has a tremendous impact on the home’s value.
Where you build your home can play a huge role in how much value you may get when you decide to sell it.
If you build in a new area, you may not have any resale value because no one has yet bought a home. However, you can offset this by building in a great location with high appeal.
Before construction begins, tour the neighbourhood to see what types of homes are being built there. If you notice that most homes are one style, you may want to consider another architecture to fit in with the neighbourhood.
3. Square footage
If you have a large house, you may be able to offset a smaller price per square foot with a larger selling price.
A large house, however, could also lead to higher utility bills and a higher mortgage payment, which may make it less desirable for some buyers.
One way to offset the cost of a larger house is to ensure it is energy-efficient. On the other hand, a smaller house with a lower price per square foot may draw more interest if it’s in a desirable location.
If you have a smaller house, you can help boost its value by making smart upgrades that increase its appeal and comfort without breaking the bank.
4. Unpleasant history of the property
It may not affect many willing to buy a home, but it may give a sense of hesitation to move in for others if there is any unpleasant history of the home in the past. Eventually, it will also affect the appraisal process.
Per a survey, property with stigmatized backgrounds tends to get 10-15% lesser value than normal ones.
These situations are not in your control; however, you need to ensure that you don’t hold out any secrets to avoid legal trouble in the future.
You should also review the state’s disclosure requirements and consult an attorney if there are any questions.
5. A bumpy driveway
When it comes to a home appraisal, the condition of your driveway can have a big impact. If your driveway is in good condition, it can add to the value of your home.
However, if your driveway is in poor condition, it can negatively affect the value of your home. Appraisers will take the condition of your driveway into account when determining the appraised value of your home.
So, if you’re looking to get the most out of your home appraisal, it’s important to ensure your driveway is in good condition!
Few tips to increase your home appraisal value
1. Home renovations: Don’t keep unfinished work pending; fix all the bells and whistles to add valuable square footage to your home. As a part of home improvement, increasing the number of bedrooms or bathrooms will add to your home’s appraisal value. Consider upgrading your kitchen with high-end kitchen appliances if your budget permits.
2. Adding a deck or courtyard: Additional outdoor living space can greatly impact the appraisal value of a home.
3. Energy-efficient improvements. These days, energy efficiency is a big selling point. So, if you can make your home more energy-efficient, it may be more appealing to buyers.
4. Curb appeal. First impressions matter. So, if your home’s exterior could use a facelift, it may be worth doing some work to increase its curb appeal. Focus on improving the curb appeal of your property. This can be anything from power washing your siding to planting some colourful flowers. Just making your home look more inviting can increase its value in the eyes of potential buyers.
By considering these things, homeowners can help create a more valuable home. And when you want to sell your home, you may get a higher price for your property.
What hurts a Home Appraisal?
There are a few things that can hurt your home appraisal:
1. If the home is in poor condition, this will lower the appraised value. Any major problems with the home, such as a leaking roof or a cracked foundation, can derail the appraisal value.
2. If the home is located in a neighbourhood that is not desirable, this will also lower the appraised value.
3. The appraised value will be lower if the home is compared to other homes of similar size and condition but located in a better neighbourhood.
4. If the appraised value is lower than the quoted selling price of the house, the home appraisal process will end.
5. If the home has been on the market for a long time without selling, this will also lower the appraised value.
Home Appraisal Tips For Sellers
- Appraisals can vary greatly, so it’s important to understand the process and what factors contribute to your home’s value.
- Work with your real estate agent to determine a pricing strategy that will attract buyers and help you get the best possible price for your home.
- Get an unbiased professional appraisal to find your home’s market value.
- Ensure your home is well-lit, inside and out, before putting it on the market. This will help you get a higher appraisal value and make it more appealing to buyers. When the appraiser visits your home, you must ensure your home smells fresh and inviting.
- Make any necessary repairs or improvements to your home before putting it on the market.
- Ensure your home is clean and clutter-free before appraisers and potential buyers come to look at it.
- Be prepared to negotiate with buyers who may try to lowball you based on the appraisal value.
Home Appraisal Tips For Buyers
- Get a home inspection: This will give you a better idea of the home’s condition and whether any major repairs need to be made.
- Get a comparative market analysis (CMA): This will help you determine whether the asking price is in line with other homes in the area.
- Get a pre-approval loan: This will show the seller that you are a serious buyer and will help you avoid being taken advantage of in negotiations.
- Look for a licensed appraiser.
- Make sure the appraiser has experience with the type of property you buy.
- Ask for a copy of the appraiser’s report.
- Review the appraisal report carefully.
Home Appraisal Tips For Refinancers
- Get a home appraisal done before you refinance your mortgage.
- Find out the value of your home with a comparative market analysis.
- Use an online home appraisal tool to estimate your home’s value quickly.
- Get a professional home appraisal to assess the current value of your home.
- Research recent home sales in your area to get an idea of what your home might be worth.
- Consider the costs of refinancing, including appraisal fees, before deciding.
- Talk to your lender about their refinancing options and compare rates to get the best deal.
How Long Does A Home Appraisal Take?
Generally, the home appraisal process may take 1 or 2 weeks, but it may go beyond 4 weeks in some cases.
The appraisal process takes longer when an area comes under an active real estate market and many houses are being sold or refinanced.
The primary reason is that only a few appraisers are familiar with the area. In reality, the number of competent appraisers is decreasing by 3% annually. In other words, you may need to wait if there are many transactions taking place at the same time.
How Much Does A Home Appraisal Cost?
Essentially, a home appraisal costs between $300 to $500. However, the appraisal cost for the buyers may go up to $1000.
What Do Home Appraisers Look For?
– The appraiser will look at the size, style, age, condition, and features of the home, as well as any recent improvements that have been made.
– The appraiser will also take into account the location of the home, as well as any amenities and features that may be nearby.
– The appraiser will also look at comparable homes in the area to get an idea of what the home is worth.
– They will also look at the surrounding neighbourhood and compare the home to similar properties sold recently to determine its fair market value.
Types Of Home Appraisals
– Desktop Appraisal: This is the quickest and most basic type of appraisal. The appraiser will simply look up recent sales of similar homes in the area and give you a value based on that.
– Field Appraisal: This is a more thorough appraisal that involves the appraiser coming to your home to inspect it in person. They will look at the home’s condition, size, layout, and unique features.
– Comprehensive Appraisal: This is the most thorough type of appraisal. In addition to inspecting the home, the appraiser will also look at the surrounding neighbourhood, the local market, and any recent sales of similar homes.
– Drive-by appraisal: only the exterior of the property is considered
– Interior appraisal: the appraiser goes inside the property to assess it
A home appraisal is typically based on the location and overall condition of the home. So, it’s always better to educate yourself with all the nitty-gritty of the appraisal process before you proceed.
If you want to boost the value of your home when you go to sell it, improve its curb appeal, and fix the repair works and any foundation issues or faulty appliances. The same goes for refinancers. Home buyers should also be aware of the procedure and ensure the price justifies the appraisal value of the home they are going to buy.