What Is A Home Appraisal?
A home appraisal is an unbiased evaluation and estimate of your home’s actual market value. Home appraisals are common practice among lenders to ensure that they and their clients get a fair price for the property they intend to buy or refinance.
A home appraisal is conducted by an appraiser, a third and independent party, who has no stake or interest in the property or transaction. They are usually highly trained professionals who follow strict rules in appraising the value of a house. Appraisers are expected to ensure that their evaluation of a property is as fair and objective as possible.
The value of a property as determined by the appraiser usually determines the amount of money that you as a borrower can get from a lender, which means it can often be a crucial factor in the success or otherwise of a real estate transaction.
So, as a homeowner, you will usually need to do your utmost best to present your home in a positive light to get a favorable appraisal. The reason for this is apparent. The higher the appraisal value, the higher the chance that someone looking to buy your home will get the amount they ask for from the lender, and therefore, more likely to meet your asking price.
8 Things To Avoid to get a Favorable Home Appraisal
Appraisers check various factors that influence the value of your home. Some of these factors are out of your hands, but others can be controlled. We’ll go through the three elements you can influence first, then discuss some other factors you can’t control.
Neglected Maintenance Needs
Houses need regular upkeep. Otherwise, problems will pile up and cause extensive damage. It is expensive to repair such damages, and this hurts a home appraisal. Furthermore, the issues caused by neglect often result in an unpleasant physical appearance that is difficult to hide.
Outdated Systems And Appliances
Major systems like electrical, plumbing, and HVACs are expected to be updated every few years to maintain the quality and safety of your home. Likewise, appliances with advanced technologies are released almost every year.
As such, homeowners are also expected to keep their systems and devices up-to-date. You don’t need to have the latest appliances and gadgets, but you should at least have appliances within the range of modern appliances.
Dated Interiors or Finishes
Your home’s interior could also affect the appraisal value as it could deter a potential buyer. Outdated interiors may not bode well, especially if they appear worn out. Interiors and finishes that are outdated and worn out will diminish your home's value even if they are not necessarily old.
Similarly, interiors that cater to a specific style or niche may hurt a home’s appraisal value because it could deter a buyer. Since it caters to a particular taste, some buyers may hesitate due to the need to change the interior if it is not in line with their taste.
When a property has a flaw that makes it undesirable to homebuyers, appraisers refer to this as functional obsolescence. Having functional obsolescence can negatively impact your property's appraised value.
The usable or living space is an essential factor in the value of your home. Livable space includes bedrooms, bathrooms, and living rooms. It does not include attics, garages, and basements. These are significant factors since they are important to buyers. The larger these spaces are, the higher the value of your appraisal is likely to be.
Naturally, the area of your home is a significant factor in the value of your home. Appraisers consider the quality of schools near the house, employment opportunities, shopping, entertainment, and recreational centers nearby. They may also consider the road noise, which could significantly affect the life of the potential buyers.
In addition to the location, the value of the houses comparable to the size and features of your home will influence the appraised value of your home. Appraisers compare the prices to get an idea of the market value for your house. The pieces of housing data are referred to as comparable sales.
To this end, the input of a local realtor might come in handy to make the appraiser's work easier, as the agent will likely have an idea or price list of surrounding properties.
The demand for homes in your area also affects the value of your home. If properties in your area are decreasing, then the value of your home will also likely decrease, and vice versa. Appraisers also have to consider the future value of your property which could either be an advantage or a disadvantage for the potential buyers.
Since you don’t get to choose the appraiser for your home, this is out of your control. However, the appraiser’s experience in your location or area will affect their judgment, therefore the appraised value.
Naturally, they will conduct the necessary research. Still, there is a chance that they may reference information that is no longer up-to-date, especially if there are recent improvements in your area.
What To Do If You’re Unhappy With The Appraisal?
If your home’s appraisal value came out lower than expected or what you believe is fair, you could ask for a second appraisal. You will need to submit a Reconsideration of Value (ROV) which disputes the first appraisal. A real estate lawyer can help you prepare the evidence to supplement your dispute.
The outcome of your home’s appraisal is an essential factor that could affect your real estate transaction. So, it would be best if you prepared your home to avoid these things that could hurt your home appraisal.
About the author: The above article on things that negatively impact a home appraisal was written by Kanayo Okwuraiwe. Kanayo is a digital marketing professional and founder of Telligent Marketing LLC, a digital marketing company that provides various digital marketing services to professionals in the legal, medical, financial, real estate, and other industries.