10 tips to boost your home's appraisal
Lowball appraisals can kill deals. Here are the top ways to keep your home's look, feel and condition as updated and cared-for as possible.
© Joshua Lott/Reuters
The appraiser was due in an hour. The beds were unmade, breakfast dishes in the sink and toys scattered about the playroom. Would she care?
I got moving — and cleaning. At 34 weeks pregnant, that's not so easy.
After all, I know lowball appraisals can kill deals.
They can also kill a refinancing application, which we are in the midst of for our 1920s Georgian-style house in Queens. If an appraisal comes in too low, it's not worth refinancing, or you might need to put in a whole lot more equity.
We don't know how ours turned out yet, but after talking to a handful of appraisers, I felt great regret at not doing more to plan and prepare. Here are some tips based on those conversations.
Caution: Some of the advice — like home valuations themselves these days — might seem contradictory. But what all the appraisers agree on is the importance of keeping the look, feel and condition of the property as updated and cared-for as possible.
1. Spruce up the house. Appraisers say that you don't need to deep-clean under couches and that a few dirty dishes won't hurt your home's value. But rats, cockroaches and that car you've been tinkering on might. "Things like overgrown landscaping, soiled carpeting, marks on walls — those do affect value and are part of the property's overall condition rating," said Dean Zibas, the president and chief appraiser for Zibas Appraisal in San Clemente, Calif. In other words, think broom clean, not set design for a home-decorating magazine.
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2. Curb appeal also matters, so mow the lawn, hack those weeds and trim those hedges. This can also help offset your house from unfair comparisons with foreclosures nearby. "In today's climate, I can't stress enough: condition, condition, condition," said Doreen Zimmerman, an appraiser in Paradise, Calif. "An hour or two, for the most part, will set your home apart in the actual picture that the lender gets from the appraiser versus the actual picture that the appraiser will provide of the (foreclosure) down the street."
3. Keep a list of all the updates you've made and be ready to hand it over; a sketch plan of the house indicating square footage also helps. "Have a list of updating done within the past 15 years. Itemize each update with the approximate date and approximate cost. Also highlight the notable features of the property," says Matthew George, the chief appraiser of Eagle Appraisals in Denver. Remember the items that an appraiser might not notice, such as a new roof or insulation. Don't forget the minor items. For example, I mistakenly told the appraiser we hadn't updated one bathroom, but actually we had installed a new sink and had the tub sealed. That counts, the experts say.
4. Have comps on hand. Yes, this is the appraiser's job, but every little bit helps -- especially if you are aware of a nearby property that sold without the aid of a real-estate agent, says Mark T. Smith, the owner and president of Smith Appraisal Services in St. Augustine, Fla. That can mean it wasn't posted on the multiple listing service, and can result in other delays by the time it gets posted through other government data sources.
5. Be mindful of peeling paint. Loans insured by government agencies, such as the Federal Housing Administration or the Veterans Administration, will require peeling paint to be removed in houses built before 1978. But don't worry too much about a child's scrawling on his bedroom wall, unless it's going to require a whole new paint job.
6. Focus. "Don't spend money that won't yield a return on the investment. The best expenditures for most markets are paint, carpet, light and plumbing fixtures," George says. Prioritize what you do; if you're the type of homeowner who has upgraded and fixed items as they broke, you should be fine.
7. Location still matters. If there have been changes to the neighborhood, mention them, from a new playground to a new Whole Foods. If the area has been declared a historic or landmark district, let the appraiser know.
8. Keep the $500 rule in mind. Appraisers often value houses in $500 increments, so if there's a repair costing more than $500 that can or should be made, it will count against the property. Fix leaky faucets, cracked windows, missing handrails and structural damage.
9. Remember the concept of "effective age," the age the appraiser can assign to a home after taking into consideration updating and condition. "Say you have a cracked window, threadbare carpet, some tiles falling off the shower surround, vinyl torn in the laundry room and the dog ate the corner of the fireplace hearth," says Zimmerman, who wrote the book "Challenge Your Home Appraisal" and runs a website by the same name. "These items could still add up to an overall average condition rating as the home is still habitable. However, your effective age will be higher, resulting in comparables being utilized which will have the same effective age and resulting lower value."
10. Lock up Fido and Fifi. Appraisers say they get annoyed enough by homeowners following them around, but a snarling, growling dog is even worse. Along the same lines, try to make the appraiser comfortable — if it's cold out, put the heat on; if it's hot out, the air conditioning. "If it's 100 degrees out and you never put the air conditioning on, put it on for the appraiser so they don't question that your unit is broken," Zimmerman says.
With those things in mind, let the appraiser do his job. "Questions and banter may make the inspection go slow or make the appraiser miss something," said James R. Gerot, a residential appraiser in Ottumwa, Iowa. "My inspections have a rhythm to them, so once I get started, interruptions are just that. Save questions until after."
Truly a Summer Place has a point. I went to refi and the Bank sent out an Appraiser. I fully expected a lower appraisal than previously because the market has declined. The Appraiser gave a number, but the Bank said it would only allow an appraisal value of 75% of what the Appraiser stated. And then the Bank would only allow a refi of 75% of their new number. I told them where to stick their refi money and now have the house on the market instead since I am relocating out of state. I listened to my Realtor and listed it for $50,000 less than I wanted to. I've had 6 people through it since Oct. 21, 2011 (one showing was in the middle of my five y.o.'s Halloween Party with 35 little kids plus their respective parents). Unfortunately, two that are interested can't afford it.
Anyone looking for a well-kept custom home on .62 acres in Las Vegas?
just because it would cost more to build your house than it is worth doesn't mean anything. Why do you think new home construction has all but stopped in most areas? You can't blame the appraiser for following the rules-for any lender in the country (with the exception of extremely rare properties) 99.9% of all residential appraisals must be based on comparable sales. (ps-comparable means similar in size, location, age, condition, etc...) If I can buy your neighbors short sale property which is identical to yours for $200,000-what makes yours worth $250,000?
If all you have is foreclosure comparables in your market area-guess what-your house is not worth what you paid for it.
If everyone is such an expert and thinks the mortgage company and appraiser is ripping them off-here's an idea-pay for your house in cash. No lender and no appraisals.
housing is the only thing where people assume something will always be worth what they paid for it(or more) I don't hear anyone complaining about car dealers. You drive a new $50,000 car off the lot and its worth $40,000. 2 years later its worth $20,000-then what do most people do-go trade it in on another one and start over.
First, any appraiser that refuses to show you their ID and license/certification upon request should be reported to your state appraiser licensing board, as that is likely a violation of your state's licensing law. Secondly, residential appraisers are required to inspect and take photos of every room of the residence, without exception. If something is covered, I am going to look behind the cover to determine if it is hiding damage. The lender and/or their underwriter will also usually question something that is hidden in the interior photos, which may result in a request for the appraiser to return to the property and take photos of the area that is hidden. The appraiser should have explained this to you, and courteously answered any other questions you had. Sounds to me like a bit of an attitude on both sides.
Your Real Estate sales person is a crook, see advice I gave Dragon above regarding reporting improper actions of a licensee.
Just to be very clear: The houses that my RE sales person thought should sell and appraise at the same price as my home (and that he wanted to buy at same price)..... had:
broken windows and doors,
no cooking stove or dishwasher,
need new roof and gutters
need painting inside and out,
need repairs to siding
need significant plumbing repairs,
need light fixtures inside and out,
need huge overgrown tree removed that had damage plumbing,
need electrical repairs,
need floors and carpet,
need new kitchen cabinets. Where as my one owner home had all of this new.....I don't see similar anywhere except located in same neighborhood!!!!...do the math
The appraised value is based on similar style properties that have sold(not foreclosed) in the last 6 months that are in the same neighborhood as the subject property plus or minus approximately 2-4% depending on condition and amenities.
So unless your planning on adding some square footage or major amenity improvements, your really not going to see a huge increase on the appraised value in relation to the money that you've spent to prepare the house for sale.
I feel your pain. I have completely updated my home inside and out. I was less than impressed with the amount of equity we have lost. In reviewing the appraisal it was noted that the comps were not actual comps but homes in which the owners were completely upside down on their mortgages. The biggest issue in today’s market that I can see is the appraisers are using both foreclosures and short sales as comps. This really is not fair because if you are refinancing your home it is not a distressed sale and should be appraised accordingly. I feel if the appraisers use actual non-distressed sales the home’s value should be in line.
I'm an appraiser and it does (or should) make a difference in what condition your house is in! That being said, appraisers are generally hired by AMC's (Appraisal Management Companies) who are so-called go-betweens, acting as agents for lenders. They have a history of engaging the lowest bidding appraiser who will do the job fastest. Cheap and fast isn't the way to get a good estimate of value (time is money) and those appraisers don't have the time to do a really thorough job with the money they are paid. It takes time to find out about the conditions and motivations of the sellers and buyers of those comparable sales, and to apply the appropriate adjustments to them in comparison with the subject property.
One thing to remember in preparing your home for appraisal, or just the updating/upgrading/remodeling process in general: Cost does not always equal value. That completely remodeled kitchen or bath may be valuable to you, but in the market, it will not probably bring back its entire cost. Some remodels or upgrades are more valuable than others. My experience is that kitchen remodels are more valuable than bathroom remodels. Granite is nice but costly and not liable to return that cost very well in value. Decks are probably the best bang for your buck.
Don't know whether appraisers working for the mortgage co. are "encouraged" to undervalue the property, but I can sure as day tell you that the tax man will OVERVALUE the crap out of it. If only we could all sell our homes for what the government tells us they're worth, we'd have an instant fix to the housing mess!