Photo Credit: Alamy Stock Photo
Your home may be your favorite place to be, but it’s also an investment. Like any other investment, you want to know its value with some reliable degree of accuracy. A home appraisal is an unbiased opinion of a home or property’s value. Real estate professionals or other appraisal experts can help you determine the market value of your home. This is helpful whether you intend to stay in your home or wish to sell it. Naturally, even if you choose not to sell your house, you certainly want to maintain your investment and ensure that your home value doesn’t drop. Here, we’ll explore everything you need to know about home appraisals and how to maximize the value of your house.
While you might be tempted to define your home’s value as what you paid for it, the real value is in what someone else may be willing to pay for it. Home values are, unfortunately, subject to the ups and downs of the real estate market. When the housing marketplace favors sellers, home values run high. During these times, you might make a substantial profit on the sale of your home. During buyer’s markets, sellers might find it difficult to sell an outdated home or to achieve their asking price. Your home’s value, therefore, isn’t stagnant; it’s dynamic. And that means you can actually impact your home’s value by making renovations that are likely to increase its marketability and value in the real estate market.
Many people never have their home appraised until they want to refinance or sell it, since an appraisal can help them understand the going rate for a house that’s similar to theirs. However, you can have your home appraised at any time—and it’s a good idea to do it periodically. As an asset, your home has monetary worth, and it will prove useful to you to know what that worth is and how it may have shifted every few years.
You can contact a home appraiser in your area to visit your home to conduct an appraisal and make a report. Typically, an appraisal takes about an hour. Not all home appraisers are licensed. It’s best to work with a licensed or certified home appraiser who has experience in the real estate field. Some appraisers work separately and have their own private businesses while others may work for a bank or an appraisal firm that employs many appraisers.
To begin the process of having your home appraised, you’ll need to select an appraiser and schedule their inspection. They’ll have their own checklist and methods for completing their report. Usually, this process lasts for about an hour.
When your real estate appraiser visits your home, they’ll be interested in its major systems, like the roof, electrical system, and HVAC unit. They’ll want to mark its structural integrity and measure its square footage. In their report, appraisers generally include information such as:
Your home appraiser will arrive with a checklist in tow—either a paper version or an electronic one. Major points on an appraiser’s checklist include:
These are the major points on your appraiser’s report, but they may offer other types of information as well that will help them nail down a home appraisal for you, which will include information to help you make improvements that are likely to increase your home’s value.
Once your appraiser delivers their report with a stated appraisal for your home, you’ll know its value—but also know it will change over time, for better or for worse. And even though you hired a professional appraiser to provide you with a value for your house, it’s not a guarantee that you will receive that sum when you sell your house. On the other hand, the appraisal’s ballpark is a pretty solid figure, and you can usually rely on it to help you come to the right asking price.
Keep in mind that a home value estimate is based on data from your neighborhood that reflects what similar homes have sold for in the real estate marketplace. It isn’t a professional appraisal and may not reflect the specific condition of your house. In this regard, it’s more of a guide than an actual value that you can rely upon.
The national average for a home appraisal is roughly $300. Some appraisers may charge as high as $600 depending on their experience, level of expertise, real estate market, and the size or complexity of the home. Although the cost may be an important consideration to you when hiring a professional appraiser, you’ll definitely want to choose one based on other factors, too, such as their experience and certification.
Some real estate firms or banks may refer to the home appraisal as a real estate appraisal. These terms are often used interchangeably. However, the assessed value is something different; it’s generated by local governments to determine real estate taxes. Generally speaking, assessed values are often less than appraised values. Assessed values may or may not include a home inspection and they reflect data of similar homes in the locality and what they’ve sold for.
Various factors can hurt your home’s appraisal. Some of these factors include:
It can be helpful to clean and repair features before having your appraiser come for a visit. While home appraisers try to look past cosmetic problems, they also know that sometimes an unkept setting is one that hasn’t been properly maintained. It’s helpful to invite an appraiser into a clean, relatively clutter-free home (at least to the extent that they can conveniently measure and perform other tasks associated with their job). You might also clean up your landscape and make any small repairs that could detract from a stellar report.
Once you have your home appraised, you may be perfectly content with its value or you may want to take steps to maximize that value so you are more likely to achieve a higher sale price at sale time. You can also make some updates that will help you boost your home appraisal value if you choose to conduct renovations before inviting an appraiser into your house.
Many home improvements are associated with home value increases. When you make these investments, you’re more likely to recoup their costs or a substantial portion of their costs at sale time, and you should see these boosts reflected in your home appraisal report. The top home value updates include:
While most people are aware that kitchen or bathroom renovation can boost their home’s value, there are other ways to achieve an increase too. For instance, you can transform an attic into a functioning bedroom, install walk-in closets, or refinish all your wood flooring. Don’t neglect repairs or maintenance either. Fix holes in your drywall or repair unsightly cracks in your walls.
When updating your home, don’t just focus on the interior. Your appraiser will assess your home’s exterior, too. You can boost your home’s value with exterior upgrades and features that include:
A home appraisal is a helpful resource that lets you know where you stand fiscally with your home investment. While it’s important to have your home appraised before listing it on the market, many homeowners opt to have their homes appraised every other year in order to stay up to date with its value. Use these tips to plan home upgrades that will enable you to boost your home’s value, helping you make the most of your property investment.