What Can Lower My Home Appraisal?

What Can Lower My Home Appraisal

A quick primer: how appraisers usually value homes

Before diving into what could affect the value of your home’s appraised value Let’s examine the most commonly used method appraisers determine value, and what appraisers typically will be looking for.

 Comparable sales or “market data” approach

The most popular method appraisers employ to determine what value to assign your house is the method of comparable sales. If together similar sales or “comps,” the appraiser will find recently sold houses that are similar to yours and utilize these as a method to benefit determine what the worth of your home.

Comps are the most reliable if they are in close proximity to the size, age (square footage ) and amount of rooms) and location to the property. In addition, a quality comp will come with the same amenities you have, for example, the two-car pool or garage. If your agent conducted an analysis of market trends of your house before listing and pricing it in the appraisal, then the appraiser’s choice shouldn’t come as a huge surprise. Both of you will likely be working from the same information and the history of sales for your area.

If your home is used primarily as Airbnb or a rental an appraiser might apply the income approach to determine the worth for your house. Appraisers can also use the cost method to assess new constructions, or if the property is distinctive satisfying it doesn’t have any comparable properties available to give justice to it. The cost method considers the amount it would cost to construct your home from scratch. The calculation takes into account costs for land acquisition, the amount it will cost to build a new structure on the property, and the depreciation on the existing structure.

We’ll concentrate on the concept of comps because they’re what you’ll typically see in a real estate deal or refinance scenario.

 Which factors can lower your home’s appraised value?

In terms of things that could affect the value of your home’s appraisement, some elements are in your control, while others could be influenced by external forces such as the economy or market.

1. Your home doesn’t appear to be in great shape.

“If your home is filthy or doesn’t smell good, an appraiser doesn’t want to spend much time in it — they might not even notice big-ticket, value-add items,” states Michelle Minik, a Phoenix-based real estate agent who has had 70% higher sales of homes than the competition in her region. There are also concerns with appraisal experts if the house is in poor condition with scratches and wall dings, peeling paint, or floors that are damaged.

What could you do to fix it?

 Help an appraiser to look at the assets of your home with this checklist:

  • Take care to clean the house the same way you would for a house show.
    Appraisers are technically not trained to record your home for cleanliness, but first impressions count, and you’ll want to demonstrate that you’ve taken care of your house correctly. Clean shelves, vacuum and cabinets, sweep and mop your floors and wipe clean countertops and other surfaces. Clean up your children’s toys and clear out any items that are causing chaos in the hallways and floors. Be sure not to have dirty dishes at the kitchen sink!
  • Make your curb appeal more attractive.
    Mow your lawn, remove the weeds, border your flower beds and tidy up your entryway. There isn’t a need to place an amount on curb appeal with quantitative appraisal techniques, but appraisers will take into consideration the qualitative aspects in determining the final value.
  • Make sure to address any minor repairs or everyday maintenance tasks.
    Verify that all the electrical outlets are working, change the burned-out bulbs, and employ a handyman to tackle issues such as doors with broken handles, cracks in drywall, or damaged cabinet doors.
  • Avoid investing in extensive renovation projects.
    In preparation for your house’s appraisal shouldn’t be a the last-minute renovation as you’ll never receive back what you paid for dollars. If you’re looking to raise your property’s value in the in the long run, you must prepare your projects in advance of time. If you are only looking to appraise the property, make sure that you make the home appear perfect in its current condition, regardless of whether your kitchen or bathroom is fitted with the latest fashions.

2. You have a lot of basement-level level footage.

However good your basement’s finished structure, it will not be worth the same in terms of above-ground living as to an appraiser. “Appraisers will take a baseline of say $100 a square foot for the above-grade space. And maybe the below-grade space is 70% or $70,” says Chuck Argianas, a well-qualified appraiser with more than 30 years of expertise in the appraisal of homes.

What is the excellent way to deal with it?
You aren’t able to change the place of your basement, however, you can have an idea of the way it will be assessed before the time it occurs. If your basement is located outside access, it may be valued higher. The less it’s below grade, the less area will be appraised for. It is also possible to consult your agent for real estate to determine how an appraiser will assess the basement to warrant that you’re not shocked with the payoff.

3. Your appraiser included a bad apple in the comps pool.

The properties that your appraiser picks will ultimately affect the appraised value of your home. Your appraiser is skilled in reviewing and identifying comparables, and, therefore, typically, the information on sales is exact. Let’s suppose that there are two homes that are identical in the same neighborhood, however, the appraiser chooses lower values from two homes to assess your home. It turns out that one was a divorce sale, and that’s why it was sold for less. You could have an instance that could make an ethical appraiser admit the mistake and revise their report.

What is the perfect way to deal with it?
In the event that you have with your broker conducted a comparative analysis to benefit appraise your house for sale, you’re probably aware of a good understanding of the competition in your neighborhood and communicate your findings to the appraiser. Although it isn’t recommended for you to personally be present to appraise your property You can request your agent to assist.

Naples-based agent John Krol aims to attend his appraisals of sellers to offer an opinion on the comps he chooses to review. “I just want to benefit the process any way I can to make sure it goes smoothly and the comp properties are reflected in the property’s value,” Krol says.

4. Market conditions are constantly changing.

Sometimes, the real estate market is more volatile than available information on sales. Appraisers should ideally look at houses that sold within the last 90 days; however, in some instances, they might have to look farther back than that period. It is also crucial to ensure that appraisers are skilled in the area, i.e., familiar and up-to-date with the neighborhood and trends in price at a neighborhood and regional level.

What is the excellent way to deal with it?
Another issue is to consider the integrity of the comps. It is essential to ensure that the comps you select for the appraisal are as current as possible and reflect the final sale price of the property, not the price of the listing. Your real estate agent can help you with this.

5. You have a unique property.

Perhaps your house has features that many homes in the area don’t, such as a breathtaking view, a unique garage, or a custom-built feature. The appraiser may not know how to value these things and could undervalue them, resulting in a lower appraisal.

What is the accurate way to deal with it?
The first thing to do is conduct an honest discussion with your agent to ensure that the feature is actually worth the investment. “I’ve seen some koi ponds in my experience,” Minik says, “but in reality, they’re not really a lot of value. I don’t believe everyone’s going to find enough value in the ponds.”

If you’re selling a home with a variety of features and you’re worried about how the property will appraise before closing, Minik recommends sellers obtain an appraisal prior to listing. This will eliminate any doubts you may have regarding the worth of your house and lower the chances that your lender’s appraisal will fall below the amount of the contract.

The appraisal process can be stressful, cryptic, and beyond our control as homeowners and sellers. However, doing your best to better prepare your house for an appraiser will ease some of the tension surrounding the procedure. Knowing what to expect could help you receive the best valuation that your home is capable of receiving.

Read More: Home Appraisal Ideas

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