- Why Appraised Value Matters?
- How Do Home Appraisals Work?
- Quick Fixes with Significant Impact
- Major Renovations with High ROI
- Appraisal Preparation: Ensuring a Smooth Process
- The Difference Between Appraisal and Market Value
- Leveraging Professional Insights for Maximum Value
- Maximize Your Home's Appraisal Value
- Frequently Asked Questions
How to Increase Home Appraisal Value: Essential Tips and Strategies
A top-dollar home appraisal not only saves you thousands on your mortgage but also paves the way for financially beneficial terms on your mortgage or refinance. However, many sellers merely hope for an appraiser to see the full value of their property rather than taking active steps to enhance it.
In reality, upgrades and strategic preparations significantly impact the appraisal amount, leading to substantial financial benefits when the property is assessed at a higher value than initially expected. Whether your goal is to refinance or sell at the contract price, you should always take steps to ensure your property appraises at the highest possible value.
Appraisals, an essential component of any home purchase or mortgage change, objectively analyze a property’s market value. They are typically used during a refinance or for financing purposes during a property sale. An independent, licensed appraiser assesses the home’s value by considering various factors such as location, size, condition, and recent comparable sales.
With the right strategies, you can increase your home’s appraisal value.
Why Appraised Value Matters?
A property’s appraised value carries major implications for homeowners seeking home equity loans, looking to refinance, or preparing to sell. But why is professional assessment so pivotal?
For a home equity loan or cash-out refinance, the appraisal amount determines how much equity you can leverage for financing. Lenders want assurance the loan does not exceed a percentage of the property’s fair market value.
The higher your home appraises, the more favorable loan terms you may obtain. For example, if a property appraises for $400,000 rather than $350,000, the homeowner could potentially access more equity and secure more favorable loan terms.
When selling a home, you want the appraisal to match or exceed your asking price. A lower appraisal than your list price could lead to unfavorable circumstances such as having to drop the price or renegotiate terms with buyers.
Of course, sellers may contest a low home appraisal to defend their property’s true value, but buyers are limited by their lender’s conditions.
Before listing your home, consider requesting an online home value estimator or contacting a real estate appraiser for an early assessment. Strategic renovations and meticulous presentation can help maximize your eventual appraisal when selling.
With so much riding on a home’s appraised value, taking proactive steps to showcase your largest asset is key. Even small tweaks can positively influence this essential number for purchasing, refinancing, or selling.
How Do Home Appraisals Work?
A home appraisal is a detailed inspection and valuation process conducted by a licensed professional home appraiser. Typically, an appraisal is done when getting financing on a property, whether that’s a purchase or form of refinance.
There are several steps in a standard home appraisal process:
- The lender orders the appraisal.Once a home buyer is under contract, the mortgage lender will order an appraisal through an appraisal management company. If the homeowners is ordering the appraisal then they would contact the appraisal company directly.
- The appraiser is assigned.The appraisal management company will assign a local appraiser and provide information like the property address, sales price, and contact details.
- Research is conducted.Before visiting the home, the appraiser will research the property and surrounding area, looking at factors like recent sales of comparable homes.
- The home visit.The appraiser will conduct an home inspection of the interior and exterior of the home, taking measurements and photos. This on-site visit usually lasts 1-2 hours.
- Valuation determined.The appraiser will determine a fair market value for the home using their inspection notes, research, and appraisal formulas.
- The appraisal report is compiled.The appraiser will compile a detailed report outlining their valuation process and final appraised value.
- The report is submitted.The completed appraisal report is sent to the lender within 1-2 weeks of inspecting the home.
- The lender reviews.The lender will evaluate the appraisal to ensure it meets underwriting guidelines before finalizing the loan.
A home appraisal involves thorough research, an on-site inspection, market analysis, and a final report. This provides the lender with an objective look at the property’s value.
Property Factors Appraisers Use to Define the Value of Your Home.
When appraisers evaluate a property to determine its value, they consider a several features and factors to determine its market worth.
The valuation takes into account each factor individually and also how they influence each other.
- Location – A good neighborhood is usually each to understand but it also involves the property’s proximity to employers, top-rated schools, public transport, and recreational areas.
- Size – Square footage plays a role, but the usability of that space (e.g., the layout or functionality) can also be a deciding factor.
- Age and Condition – Newer homes might appraise for more than older ones, depending on the location, but a well-maintained older home in a great area will also hold value.
- Upgrades and Renovations – Often the best neighborhoods are older neighborhoods, which means older homes. Modernized kitchens, updated bathrooms, or other home improvements can boost a property’s value. However, the return on investment varies by region and the nature of the upgrade.
- Comparable Sales (aka Comps) – Appraisers look at recent sales of similar homes in the same area. These “comps” provide a reference point for determining the property’s market value. Appraisers must justify the value of your home with comparable homes and sales.
- Market Trends – The overall health of the housing market, whether it’s a seller’s or buyer’s market, can influence a property’s appraisal value.
Quick Fixes with Significant Impact
While major renovations can greatly improve a home’s value, it’s not always necessary or feasible when you’re preparing for an appraisal. Small tweaks and improvements can make a noticeable difference without breaking the bank. It’s all about improving the presentation of your home.
Here are some minor fixes and upgrades homeowners can do themselves to boost appraisal appeal:
- Deep Cleaning A sparkling clean home shows the appraiser the property is well cared for. Wash walls, scrub tile grout, shampoo carpets, dust ceiling fans, clean windows, and power wash exterior surfaces.
- Landscape Improvements Good curb appeal can add thousands to a home’s value. Keep the lawn freshly mowed, trees and bushes neatly trimmed, beds weeded and mulched, and exterior surfaces like fencing, decks, and driveways looking their best.
- Minor Repairs Fix minor issues like stuck doors, loose doorknobs, cracked floors, dripping faucets, and burned-out lightbulbs. Remove small points of concern that an appraiser might use to lower their value.
- Document Upgrades and RenovationsIf you’ve made improvements to the home, make a list and provide documentation. This can include kitchen or bathroom remodels, new appliances, upgraded HVAC systems, or a new roof. Receipts and before-and-after photos can be particularly helpful.
Undertaking some projects before a home appraisal shows commitment to maintenance and result in a higher appraisal by thousands of dollars.
Major Renovations with High ROI
Planning major renovations to upgrade your home? Or perhaps you’re fantasizing about a gourmet chef’s kitchen or spa-like master bath? Well, hold that thought.
Before tearing down walls or signing contracts, consider how major remodels impact your property’s value. Not all expensive home projects offer equal returns. Focusing your renovation dollars in the right places ensures you recoup costs through increased equity and buyer appeal.
The kitchen is often called the “heart of the home” and is always a focal point for buyers. A dated, dysfunctional kitchen can deter buyers and lower value. Conversely, a beautifully renovated, modern kitchen could be a major selling point.
A full kitchen remodel has an average 70-80% ROI. However, strategic changes like new cabinets, countertops, flooring, lighting, and open layouts can make homes more valuable without a complete overhaul.
Similar to kitchens, bathrooms are a major focal point in valuations and sales. Outdated bathrooms may hinder a sale, while spacious, contemporary baths boost home values. Bathroom renovations offer a 72.7% ROI on average.
Upgrades like new tiling, vanities, custom showers, and ‘green’ features like low-flow toilets appeal to buyers. Bathrooms are one of the best places to invest renovation dollars.
Energy Efficiency Improvements
Eco-friendly upgrades like solar panels, tankless water heaters, and high-efficiency HVAC systems are increasingly desirable. They offer energy savings while you own the home and buyers appreciate these features upon resale.
Plus, incentives and rebates can offset costs. Appraisers acknowledge these improvements and they will help your asset appraise higher.
Finishing an unused basement or attic space creates valuable living areas prospective buyers covet. The added square footage and functionality add an ROI between 70-75%.
A home’s curb appeal makes a strong first impression on buyers, so exterior upgrades can greatly influence perceived value. Deferred maintenance issues like a worn roof, damaged siding, or cracked walkways can raise red flags. Alternatively, enhancing the exterior showcases a well-cared-for property.
Here are the top exterior home renovations with high ROI:
- Garage Door Replacement – Replacing an old or damaged garage door will improve curb appeal. The average garage door replacement has a 93.3% ROI.
- Manufactured Stone Veneer – Upgrading siding with stone veneer boosts aesthetic appeal. The average stone siding upgrade has a 91.4% ROI.
- Vinyl Window Replacement – New vinyl windows increase energy efficiency and help with home presentation. The average window upgrade has a 67.2% ROI.
- Wood Deck Addition – Decks create new outdoor living space. The average deck has a 64.8% ROI.
Exterior renovations improve presentation and will increase your appraisal amount. Before committing, take into a consideration where your property is lacking. It can be helpful to get a real estate agent’s professional opinion on the most valuable home renovations. Connect with top local agents with FastExpert’s easy search and verified reviews.
Emotional Value Doesn’t Equate to Monetary Value
A home often holds deep sentimental value for its owners. However, emotional attachment doesn’t directly translate to financial value. Appraisers objectively assess the property’s physical and market factors, not its intangible meaning.
Be careful about where you invest your money and be clear about where your funds will have the best payoff. Big-ticket exterior and interior renovations require that maximize usable space and functionality will be the best strategy to recoup costs.
An experienced local real estate agent can provide renovation advice personalized for a home’s strengths and weaknesses, along with local real estate trends, to maximize and increase the value of your home.
Appraisal Preparation: Ensuring a Smooth Process
Preparing your home thoroughly before the appraiser’s visit is essential to showcasing your property’s maximum value. Follow these tips for a seamless appraisal.
- Ready the PropertyGive your home a deep clean, making sure all surfaces are spotless. De-clutter rooms and pack away excess furniture so spaces appear spacious. Make minor repairs like fixing leaky faucets, cracked walls, sticky doors, or burnt-out light bulbs. Improve exterior curb appeal by mowing the lawn, trimming bushes, and washing siding.
- Gather Relevant DocumentsHave handy any documents that provide insight into your home’s history and improvements. This includes past inspection reports, floor plans, permits for renovations, and upgrades like new roofs, HVAC systems, or appliances.
- Research Comparable SalesUnderstand the local market by looking at what similar homes have sold for recently. Thoroughly researching comps gives context to understanding your home’s value. Sometimes appraisers can miss valuable comparable properties, so it can be helpful to provide them with some insight into your local market.
- Inform the AppraiserAlert the appraiser to any special features they should factor into the valuation, such as uniquely high-end finishes or recent renovations.
- Accommodate the VisitMake sure the appraiser has full access to the home during their visit. Move vehicles from the driveway, contain pets and keep children occupied elsewhere. Let the appraiser work efficiently without distraction.
Preparing for the home’s appraisal process and presenting your home in its best possible light helps maximize your chances of a higher appraisal. Do your due diligence ahead of time to showcase your home’s value.
The Difference Between Appraisal and Market Value
When buying or selling a home, it’s important to understand the distinction between a property’s appraisal value versus its market value.
The appraised value is determined by an independent, licensed appraiser hired to assess the property’s current monetary worth. They examine the home’s specifics, like square footage, condition, and amenities. The appraiser also analyzes recent sales of comparable properties in the area.
In contrast, a home’s market value is more fluid. It’s the amount a ready and willing buyer agrees to pay a seller for the property. The market value fluctuates constantly based on supply and demand dynamics, housing market trends, negotiation between buyers and sellers, and what purchasers are willing to pay for a home.
The appraised value aims to approximate the current fair market value. However, the actual market value is only determined once a buyer and seller agree to a purchase price. While related, the appraisal and market value may differ based on market conditions at the time of sale.
Leveraging Professional Insights for Maximum Value
While homeowners can implement many strategies to maximize appraisal value, partnering with real estate and staging experts takes it to the next level.
Professional Home Staging
Expert home stagers know how to accentuate a property’s strengths to appeal to the broadest range of buyers. Properly staged homes often appraise for higher values. Home stagers identify and neutralize shortcomings with thoughtful furniture arrangements, depersonalization, de-cluttering, optimizing lighting, and basic home improvements.
Insight from Real Estate Agents
Experienced real estate agents understand the nuances of their local market. They know the types of homes that sell quickly and for top dollar. Agents can provide valuable guidance on which upgrades and repairs resonate most with buyers in your area. Their insights help tailor your efforts for maximum ROI.
Furthermore an agent can help with collecting relevant recent comparable sales that can be presented to the appraiser as evidence for a higher appraisal value.
Finding the Right Professional Help
Platforms like FastExpert make connecting you with top real estate agents and other professionals easy. FastExpert analyzes agent profiles and sales data to identify top performers. Home sellers can quickly view highly rated agents’ backgrounds, specialties, and past sales to find the ideal fit.
The right real estate guidance maximizes your home’s appraisal value, resulting in more favorable mortgage terms, higher offers, and increased equity.
Maximize Your Home’s Appraisal Value
A home’s appraised value has major implications for homeowners, whether refinancing, selling, or leveraging equity. Yet many factors that impact appraisals are within your control.
With strategic preparation, thoughtful renovations, curb appeal improvements, and help from real estate professionals, homeowners can showcase their largest financial asset in the best possible light.
Don’t leave your appraisal up to chance. Implement these tips to accentuate your home’s strengths, mitigate weaknesses, neutralize risks, and highlight key features that maximize value.
A competitive appraisal result gives you the financial freedom to do what you want with your property.
Frequently Asked Questions
How often should a home be appraised?
Most homeowners only need an appraisal when buying, refinancing, or making major changes to their home. It’s generally not necessary to have frequent appraisals unless you suspect significant shifts in your home’s value that impact your financing.
Can decor and staging really impact appraisal value?
Yes! While the appraiser mainly focuses on the property details and market factors, interior design and staging make a strong first impression and showcase your home in its best light. A de-cluttered, neutral home that appeals to buyers can positively influence the appraiser.
Are appraisals subjective? How can I ensure fairness?
Appraisals aim to be objective, but there can be some subjectivity based on the appraiser’s perspective. Getting multiple appraisals can help ensure you receive as close as possible to a fair market value assessment. You can also provide appraisers with all relevant details on improvements made.
What if my home is appraised lower than expected?
If your home appraises for less than you hoped, first evaluate if the valuation seems appropriate given your local market. If you still feel the appraisal is unfairly low, you can provide more information to the lender and appraiser or request a second appraisal for another opinion.