4 SURPRISING FACTORS THAT CAN AFFECT A HOME APPRAISAL

Are you planning to sell or refinance your home? Learn four surprising factors that can affect a home appraisal and how they can impact the value of your property!

Getting a home appraisal is an essential part of the home-buying process. Appraisals help determine a home's value and can be a nerve-wracking experience for many sellers.

Location, house size, age, and features like pools or solar panels have a significant bearing on your home's appraisal value; however, changing these categories can take a lot of work. But the good news is that you can take some simple steps to ensure your home is ready for appraisal. In this article, I will explore some tips any homeowner may use to help raise their property's worth in the eyes of an appraiser.

What is a real estate appraisal?

A real estate appraisal is an expert opinion of the market value of a property. An appraiser will inspect and analyze the condition and features of your home and research similar properties in the area to determine their worth. Knowing how much you could sell your home can help make negotiations easier when it comes time to sell or purchase another property.

As a homeowner, you can shape the assessment of your home's market value by showcasing it to its fullest potential to the appraiser.

Let's take a look at four surprising factors that can affect a home appraisal:

1. Curb Appeal.

When they pull up to your house, the first impression someone has is more than you may think! Curb appeal is one factor that appraisers will consider when assessing your property's value. This includes landscaping, paint color, architectural design, and the condition of windows, doors, and roofs. For example, a well-maintained exterior with good landscaping can significantly bump up your home's value. 

Start with cutting back overgrown bushes and trimming grass, then move on to adding fresh mulch or flower beds. Next, make sure your driveway is free of cracks or potholes. Finally, if necessary, touch up any chipped paint on the exterior walls, window sills, and doors.

If your deck or patio needs some TLC, addressing its condition now will lead to a higher appraisal later. Ensure any fading stains are touched up, and the overall structure is sound, with no broken planks needing to be replaced. Cleaning it up before repainting should be relatively inexpensive but can make a tremendous difference when appraising time comes around.

Statistics show that houses with well-kept backyards and gardens can command higher appraisal values and are more likely to sell quickly.

2. Deep cleaning.

Cleaning is an essential factor in appraisals and can often be overlooked. While a quick run of the vacuum and dusting is enough, deep cleaning your house can dramatically impact you. This includes tackling areas where dirt and grime may have accumulated over time, such as behind appliances, under furniture, and inside closets. In addition, could you get rid of any cobwebs or build-up of dirt and dust in hard-to-reach places and make sure that all surfaces are clean?

You don't want your appraiser to see clutter when they evaluate your home. On the other hand, too much clutter can make a room look small and disorganized, which could lead to a lower appraisal value. Clean up any messes before the appraiser arrives and remove any unnecessary furniture or belongings from the space.

While at it, eliminate anything that could be considered hazardous or unpleasant. Such as expired food in the pantry or an overflowing garbage can. The cleaner and more organized your home looks, the higher your chance of getting a good appraisal result.

3. Home Interior. 

When an appraiser visits your home, they'll look at all the interior features that help determine its value. This includes flooring, lighting, storage space, and the condition of the walls, windows, and ceiling. To give your home the best chance of achieving a positive appraisal, clean all surfaces and fixtures thoroughly and repair any cosmetic issues, such as cracks in the walls or ceiling. Also, consider updating fixtures and hardware – a small expense that can make a big difference!

Don't trivialize the power of paint! A newly painted house with a modern color scheme can dramatically transform any area, instantly brightening it up.

4. Floor Plan.

The floor plan is another factor that appraisers will take into account. A well-designed open floor plan can add value to your home—especially for those who prefer an airy feel and lots of natural light. Avoid cramped, awkward spaces, and look for ways to make the most of your floor plan.

For example, consider doing away with separate dining and living room areas in favor of a single ample space. Take down walls to create larger rooms and reduce clutter. If you're renovating, think about adding a breakfast nook or island. These features add visual appeal and extra living space, which can benefit your appraisal.

Appraising with Confidence: Questions & Answers.

Do I have to get an appraisal?

Although not legally mandated, obtaining an appraisal is pivotal when you want to sell your house or apply for a refinancing loan with the bank. An appraisal provides an independent third-party opinion on the property's value and helps buyers gauge whether they're getting a fair deal.

What are the most critical factors in appraising my home?

The most critical factors in appraising your home are its condition, cleanliness, interior features, floor plan, and landscaping. To ensure you get a good appraisal result, make sure your home looks well-maintained and clutter-free, has up-to-date fixtures and hardware, has a good open floor plan, and has an attractive landscaping design.

Do I have to disclose any property defects?

Yes – it's crucial that you be transparent about any property defects or damages before the appraiser arrives so that they can be considered when assessing your home's value.

Does the appraiser know the price stated in our contract?

Before assessing appraisal value, the appraiser typically acquires a copy of your ratified contract with the purchase price. Furthermore, he can also view details such as how much the seller contributes to closing costs (which you can learn more about further down).

What can I do if I disagree with the appraisal result?

If you disagree with the appraiser's assessment, you can always request a second opinion. You can also take it upon yourself to improve your home to increase its value and appeal. However, you must consult an appraiser before making any significant changes that could affect the property's value.

What's the price tag for appraisal reports? 

Depending on your provider, it can range from $350 to around $500. You don't need to worry about writing a check because you can deduct this fee from your Settlement Statement at closing.

How do seller concessions affect an appraisal?

The appraisal cost must equal or exceed the purchase price mentioned in your agreement. Usually, buyers request sellers pay their closing expenses, and that concession is also added to the buying rate.

For instance, the buyer and seller agreed on $500,000, with the seller covering $10,000 in closing costs for a net of $490,000. Unfortunately, when the appraisal comes back, it reads only $495,000—which is less than what they initially agreed upon. This means additional difficulty and complexity will be due to those previously mentioned closing costs.

Typically, when the seller and buyer cannot agree on a price point, they will meet in the middle as an equitable resolution. Unfortunately, though, I have noticed that sometimes the vendor denies any bargain altogether, preferring to stick with their original mark of $500000 rather than allowing significant concessions for buyers who need assistance covering closing costs.

Before committing any seller's concession, you must ensure your home is worth the contract price.

What other factors should I consider before getting an appraisal?

It's also vital to research recent sales in your area and compare those to the condition and features of your own home. This will give you a better idea of your appraisal value's range. Also, please make sure you provide as much information to your appraiser as possible, including details about upgrades or renovations that you've made to the property. This will help them assess the total value of your home and result in a more accurate appraisal.

What should I do if my appraisal comes in lower than expected?

If your appraisal comes in lower than you had hoped, it's best to assess what the appraiser has taken into account. Some factors they may need to look into include recent upgrades to the property or its proximity to desirable amenities. Additionally, be sure to review any comparable sales used for the appraisal, as this could be where discrepancies arise. If you believe that the appraiser has made an error, it's possible to appeal their findings or hire a second opinion. Ultimately, closing the appraisal gap may require additional negotiations between the buyer and seller.

What is an appraisal gap?

An appraisal gap is a difference between the estimated appraised value of a property and its actual market value. This can be due to a variety of factors, such as discrepancies in comparable sales or incorrect data provided by the homeowner. An appraisal gap may also indicate that an area's market conditions have changed since the initial assessment was made. It's important to note that closing an appraisal gap may require additional negotiations between the buyer and seller.

What distinguishes a conventional appraisal from an FHA appraisal?

A conventional appraisal assesses a home's market value and condition. On the other hand, an FHA appraisal evaluates both the market value and whether a property meets or exceeds the minimum standards for an FHA loan. This includes plumbing, wiring, foundations, fire safety features, and so on. Thus, an FHA appraisal is more involved and could require additional inspection or repairs.

Related topics:

HOW TO INVEST 300K IN REAL ESTATE

THE EARLY WARNING SIGNS OF A HOUSING MARKET DECLINE-AND WHAT TO DO ABOUT THEM.

Conclusion: Appraising a home can be stressful for many people, but with some forethought and preparation, it doesn't have to be! By making sure you have good curb appeal, giving your house a thorough cleaning, and taking care of any repairs or broken items before the appraiser arrives, you'll give yourself the best chance possible at getting top dollar for your property when it comes time for sale. Good luck!