I’m selling my home: should I get my own appraisal?Many appraisers use Fannie Mae's Uniform Residential Appraisal Report, which was created to allow for standard reporting and analysis of
What factors that can affect a home appraisal?
Dated: November 19 2020
I’m selling my home: should I get my own appraisal?
Many appraisers use Fannie Mae's Uniform Residential Appraisal Report, which was created to allow for standard reporting and analysis of single-family dwellings or single-family dwellings with an "accessory unit".
When we talk about appraisals, we’re usually referring to an appraisal that is ordered by a home buyer’s lender. It’s usually the only appraisal that gets done in a home sale. An appraisal is the number two factor that can delay or terminate a written real estate seller contract. But, if you’re putting your home on the market, it might be a good idea to get your own appraisal. Here’s why:
• An appraisal can be a useful negotiating tool; it can be used in advertising efforts.
• It gives you an unbiased opinion of value so can help you determine the best listing price.
• If your home is unique or atypical, having your own appraisal on hand may help to effectively communicate with other agents and appraisers. Your Real Estate Agent should be able to help you, as the seller, to determine whether you need your own appraisal.
Here are 14 More Factors That Influence Your Home’s Appraisal Value:
1. Location, location, location
What makes a home’s location “good”? Here are a few factors:
• Low crime
• Quality of schools
• Near hospital, fire station, and/or police station
• Amenities like bike trails and parks.
• Well-maintained roads, streetlamps etc.
• Nearby homes are mainly owner-occupied, not rented, foreclosed, or for-sale
▪ Located in a suburban neighborhood, about 20 to 30 minutes from a large or mid-sized city
• Not located on a busy street
• Proximity to schools, grocery stores, restaurants and shops,
• Proximity to public transportation
• Access to freeways
Where your home is situated within your neighborhood also holds weight. For example, a large lot in the back of a neighborhood will probably be worth more than a corner lot parallel to the main road. And a cul-de-sac home tends to be worth more. One survey found that buyers are willing to pay up to 20% more for a home on a cul-de-sac, indicating that peace and quiet garners top dollar.
2. Structural Construction Materials and Updates
Another factor that determines your home’s appraisal value is the type and quality of the construction materials used to build your home. For example, a recently built house with modern materials or an older house updated with modern material will hold a higher value than an older home with years-ago original stock material. Newly built homes are frequently assigned a top Property Condition Rating, while a property that is constructed with inexpensive, stock materials with limited refinements and upgrades is assigned a lower rating. Updating roofs, siding or windows may add to your home’s appraisal value because they improve the overall efficiency and safety of the structure of your home.
Some high-value structural updates to consider:
• Updated electrical, especially when correcting hazardous electrical methods like knob-and-tube
• Asbestos or other dated materials now known to be hazardous have been removed
• A deeper basement which creates potential living space or useful space
• New roofing, especially if the previous roof is more than 20 years old
• New siding, especially if the previous siding was damaged
• Solar panels where conditions permit
• Additional insulation
• High-quality windows
• High-quality doors
3. Age of the Home
The age of your home will also be a factor in your home’s appraisal value. A newer home won’t necessarily appraise higher than an older home, but it frequently will. Newer homes are generally more energy efficient than their older counterparts. With better insulating materials and sustainable building products coupled with tighter modular construction, a new home buyer is getting a home with lower energy bills that result in immediate costs savings. Homes that were built within the last 10 to 20 years are less likely to have major issues, so are lower risk to buy and this will therefore increase the home appraisal value. Homes located in neighborhood historic districts that have been maintained may also have a high appraisal.
4. Design Style of the Home
Another area that will be evaluated to determine your home’s appraisal value is the overall design of the home. If you decided to go with a trendy décor, the finishes in your home could cause your home to be appraised at a lower value when those finishes are no longer in style. If your home was last updated in the 1970s, it may be appraised at a lower value. After all, avocado green and Mediterranean finishes just aren’t attractive to most people in today’s market! So, it frequently pays off to make cosmetic updates before putting your home on the market – consult with your Real Estate Agent to determine if it’d be worth it for you to make updates to your home before you list.
5. Curb Appeal
Adding curb appeal is a great way to increase the resale value of your home. For relatively little cost, you can drive up your home's appraisal value with low-cost, highreturn investments in landscaping and exterior improvements. Curb appeal is a financially smart way to boost your home's value. It’s best to go with an easy to care for and clean landscape design to appeal to most buyers and increase your appraisal value.
6. Number of Bedrooms
The number of bedrooms typically has a direct effect on appraisal value as long as the number of bedrooms correlate with your home’s square footage. The home appraiser will compare your home to other homes in the area with the same number of bedrooms to make a value comparison.
7. Number of Bathrooms
The number of bathrooms in your home should also increase your home’s appraisal value unless your home has more bathrooms than bedroom which can have an adverse effect on value. If you have 3 full bathrooms in your home, your home will probably be appraised higher than a home that has only 1 and a half.
8. Square Footage
Another area that’s evaluated to determine your home’s appraisal value is the overall square footage of the home. Basements and garages, even if they are finished, don’t generally count toward total square footage. Even if your basement is finished and livable, basements are typically excluded from square footage calculations because they are built below grade (unless your state allows basements to be included in the total square footage of a home). To get basement square footage included, your basement more than likely will need its own entry and exit from/to the outside. And, the basement ceiling height should 7 feet or higher.
9. Heat and A/C
Homes with central air will generally appraise higher than homes that require room by room air conditioning units. The type of heat and air in your home will also be a factor in your home appraisal value: how your heat is fueled, whether by electric, gas or oil will also be taken into consideration. And outdated systems will lower the appraised value of your home.
10. Storage Space
Storage space comes second to home layout as to what is the most important feature of a home to many home buyers. Extra garage space and ample storage will lift your home's value. A home that has ample amount of closet space, a useable basement and a large attic for storage will be appraised at a higher value. Many home buyers who are looking to upsize their home take into consideration how much storage space a home has, so this is also something that an appraiser will look at to determine value.
11. Garage Space
The size of the garage, or if the home has a garage at all, will contribute to the home’s appraisal value. A home with a 2 or 3-car garage will be appraised higher than a home with a 1-car garage with comparable features. And generally, where a home buyer is able to park their cars will influence the appraisal value.
12. Recent Home Renovations
Before putting your home on the market, choosing high impact areas of your home to renovate could have large returns on your home’s appraised value. If the home has undergone large home renovations since the last time it was appraised, this will also contribute to the home appraisal value. Newly updated kitchens and bathrooms hold a lot of value in today’s market, so an appraiser will take these renovations into consideration when determining the value of your home. Home renovations don’t have to cost a lot to increase appraisal value. Some of the lowest-cost home improvements yield the highest ROI.
Here are a few valuable home renovations:
• New garage door
• Minor Bathroom Remodel
• Minor Kitchen Remodel
• Attic Bedroom Conversion
• Major Bathroom Remodel
• Major Kitchen Remodel
• Deck, Patio or Porch Addition
• Replacement Windows
• New front door
• Grand entrance
• New siding
• Hardwood floors, especially when existing flooring is damaged
13. The Current Real Estate Market
The current real estate market has a large influence on how your home is appraised. In an accelerated environment with homes being bought and sold at a rapid pace, historical data can struggle to catch up and create broad differentials between an agreed-upon price and the value. On the other hand, your home’s appraised value during a “buyer'smarket”, or a market that’s saturated with a ton of homes and few buyers, will be lower.
Things that can influence the real estate market:
• Home inventory and the types of homes available in your area
• Business cycles and buyer’s or seller’s markets
• Growth of nearby town or city increases local demand
• Contraction of nearby town or city decreases local demand
• Interest rates and mortgage availability
• Overall confidence in stock market and real estate market
• Overall buyer confidence
• Local and national economic growth or contraction
Comparable homes, or “comps”, are one of the most important factors affecting appraisal value. The method commonly used to appraise single-family homes is the Sales Comparison Appraisal Method. An appraiser will take a close look at recently sold, nearby homes with similar bedrooms, bathrooms, updates and square footage to your home. The value of these homes can provide baselines for your home’s appraisal value. It is important to make updates that take into account comparables in your neighborhood. For example, a swimming pool or a high-end bathroom remodel would not make sense if most no other homes in your area have these features.
If you are thinking about selling or buying a home, please contact me: 202-441-2348 or firstname.lastname@example.org
Dell Jeanty is a licensed real estate agent serving the Washington DC area. He is Well-informed in All facets of the Real Estate Process. He’s provided stellar customer service and care in the Washi....
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