Content of the material
- 1. Improve Your Curb Appeal
- Get your Hero Rewards!
- How Do I Prepare for a Refinance Appraisal?
- 3. Create A File Detailing Your List Of Upgrades And Improvements
- What Hurts a Home Appraisal: Factors You Can’t Control
- Local Market
- Size of the Home
- Talk up your home
- Who Pays for the Cost of a Home Appraisal?
- Allow Access To All Areas Of Your Home
- Take a look at the comps
- 5. Highlight Your Investments
- How long does a home appraisal take?
- Create A Pleasant Visit For The Appraiser
- FHA and USDA appraisal process
- 10 Tips For Preparing For A Home Appraisal
- 1. Don’t Get Your Own Appraisal
- 2. Cut The Grass
- 3. Clean Your House
- 4. Staged To Sell
- 5. If It’s Broken, Fix It
- 6. Easy Access
- 7. Be A Wallflower
- 8. List Meaningful Updates
- 9. Make The Appraiser Aware Of Multiple Offers
- 10. Don’t Run Comps Or Provide Examples Of Comparable Home Sales
- Dealing with a low appraisal
- Get a better purchase price
- Challenge the appraisal
- Cancel the transaction
1. Improve Your Curb Appeal
You might not spend very much time thinking about your home’s curb appeal when you spend most of your time inside. However, curb appeal can significantly increase or hurt your appraisal value, depending on the choices you make for your home’s appearance.
Before your appraiser arrives, you may want to spend time improving your home’s exterior. Here are a few ideas to get you started:
- Mow your lawn. Look at your yard and mow when your grass is more than 3 inches long. Use sharp lawnmower blades to prevent tearing and to help keep your grass healthy. In the summer, leave your grass a bit longer so the seeds can shade the roots. This will help keep your lawn green and lush.
- Plant flowers strategically. Blooming flowers can be a massive asset when it comes to your property aesthetics. Research easy-to-plant flowers that are native to your local climate and plant them a few weeks before your appraisal. Remember to water and mulch your plants as often as necessary to keep them looking bright.
- Touch up any patio accents. Curb appeal isn’t only about landscaping – anything you display in your front lawn will affect the overall value of the home. Take care of the furniture on your patio, as well as any seat cushions. Also, power wash your siding, walkways and fencing to maximize curb appeal.
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How Do I Prepare for a Refinance Appraisal?
Preparing your home for an appraiser’s visit is different from preparing it for a prospective buyer. “When you are opening your home to a prospective buyer, you want to trigger emotional responses,” says Parsons. “As a seller, you want that buyer to be able to imagine how happy and comfortable they will be there. No such subjective considerations apply to an appraisal.”
Vaccari adds that a homeowner wouldn’t make a change—such as ripping up old carpet to reveal hardwood floors—for an appraiser as they might for a seller. Still, freshening up the home’s paint, both inside and out, can help, as can clearing away clutter to allow full access and viewing of all areas of the home, including the basement. Be sure that everything works (e.g., run your heating and cooling systems and test your kitchen appliances), and make plans for the children and pets to be somewhere else so that they aren’t a distraction. Finally, says Ailion, “if the tax records are incorrect, point that out.”
Otherwise, Vaccari says, it is the appraiser’s responsibility to discover problems and ask questions where warranted.
3. Create A File Detailing Your List Of Upgrades And Improvements
Upgrades and home improvements increase the overall value of your home. Make things a bit easier for your appraiser by compiling a file with proof of all the work you’ve done on the house since you moved in. Did you add a central cooling system? Replace the windows? Add a privacy fence to your backyard? Include sales receipts, paid contractor invoices and zoning permits if applicable. This helps your appraiser know where to look when they consider your renovations and upgrades.
Keep in mind that only permanent upgrades you’ve made to your home will count toward your appraised value. Generally, if you can take something you’ve added along with you when you move out, it won’t count toward your appraisal. Purely aesthetic choices – like painting your living room walls – won’t add to your value, but making your home look nice and feel larger can subconsciously impact your appraiser’s assessment.
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What Hurts a Home Appraisal: Factors You Can’t Control
Of course, when you look at what hurts a home appraisal, you’ll find that some factors are out of your control. You can’t do anything to change how they affect your appraisal, but you should be aware of them.
When it comes to what hurts a home appraisal, one of the most important items that’s out of your control is the local market. An appraiser will take the market trends into account when deciding on the value of your home. In particular, they’ll use supply and demand to forecast whether the price of your home will go up or down.
If your home is in an area where prices are declining, that will probably have a negative impact on home prices. But if you’re in an area where homes are in demand, your appraisal will come in higher.
Your appraiser won’t just look at your home, they’ll also look at the surrounding area. How is the neighborhood, overall? If the houses are generally well-kept and the future looks positive (new schools being built, excellent employment opportunities), then the appraisal will be higher. But if you’re in an area with a high number of vacancies or foreclosures, that’ll have a negative impact on the final appraised value.
Size of the Home
The appraiser will also look at the size of the home and the property. Mostly, the larger the home, the higher the value. However, sometimes a house is “overbuilt” — it’s too large for the property, leaving little to no outdoor space. In this case, the size of the house can actually cause a lower value, since most homeowners want a backyard that’s proportionate to the house.
The appraiser will also take the number of bedrooms and bathrooms into consideration when determining the final value of your home.
One more factor that’s out of your control in a home appraisal is the age of your home. The older your home, the lower the appraised value. Newer homes (in the last 10-20 years) have been built with more updated building codes and are unlikely to have issues. In general, they’ll appraise for a higher value.
However, if your home is in a historic district, that can actually raise the price despite it being an older home.
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Talk up your home
You’ll likely be around when the appraiser comes through, which means you’ve got a great opportunity to sell the finer features of your home, including unique assets and recent improvements. Don’t be shy about pointing out that the living room carpet is new or the trees on the side of the house bloom stunning flowers every spring. Give the appraiser space to look around (sticking too close may suggest you’re worried they’re going to find something that you need to explain), but take some time before they leave to point out the things that make your home special and worthy of its asking price.
Who Pays for the Cost of a Home Appraisal?
Typically, the bank or lending agency will hire the appraiser, and the buyer will pay the fee either upfront or as part of their closing costs. However, as the seller, you can also hire your own appraiser earlier in the home selling process to help ensure you’re setting a good price for your home. However, home appraisals don’t come cheap. The average home appraisal costs $300-$500.
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Allow Access To All Areas Of Your Home
Depending on the type of financing a buyer is using to buy your home can determine what the appraiser has to review. For example, if a buyer is obtaining an FHA home loan, the appraiser is going to be required to look in any crawl spaces and to take photographs.
While you prepare for an appraisal, it’s a good idea to make sure there is clear access to all areas within your home. It won’t make an appraiser happy if they have to clear an entire closet full of clothes in order to access an attic crawl space hatch.
If your home has a crawl space in the basement, knee wall storage, a garage loft, or other tough to access areas, make sure you do your best to ensure there is relatively easy access to these areas.
Take a look at the comps
Your home’s market value is determined in large part by how it compares to similar homes in the area that have recently sold. Your real estate agent should be able to pull information for you on recent closing sale prices in your neighborhood, which can provide you with some valuable insight into how your home measures up. Look closely at the listings of homes that are similar to yours and compare exterior and interior features and general condition. If a home sold for the price you’re aiming for but has a much nicer yard or more modern features, that suggests that if you want to get the same price you’ll need to make some upgrades.
5. Highlight Your Investments
To round out the house appraisal tips for refinancing, remember that any investment you make can be reflected in the home’s market value. The same holds when preparing for a home appraisal for refinancing. It doesn’t mean you should remodel the whole kitchen or build a new bathroom, but the paint job might need touching up.
Be prepared to invest in basic repairs and improvements to bolster the appraisal value. Harness your accounting skills and save all your receipts so that you can illustrate the money you’ve invested and the improvements you’ve made to the property.
How long does a home appraisal take?
The home appraisal process typically takes anywhere from a few days to a few weeks. The time frame depends on the property, the complexity of the appraisal, and the appraiser’s schedule (i.e., how busy they are). The appraiser may spend 30 minutes or up to several hours examining the home in person. Once the appraiser has evaluated the home, it takes a week or two to compile the appraisal report.
Create A Pleasant Visit For The Appraiser
As you prepare for an appraisal, you need to treat it as you would a private showing to a potential buyer. When you’re selling a home, there are dozens of tips for preparing for showings when selling a home.
The same tips that you’d follow while preparing for showings should be followed as you prepare for an appraisal. Creating a pleasant visit for the appraiser will not guarantee it’s a successful one, but definitely can help with their overall impression of your home.
A few of the best ways to create a pleasant visit for the bank appraiser includes de-cluttering, caging your pets, and keeping your home at a comfortable temperature. If you happen to be selling your home with pets, there is nothing worse then Fido nipping at the appraisers ankles while he or she is trying to do their job, so make their visit as pleasant as possible!
FHA and USDA appraisal process
Home appraisals vary based on the type of financing used when purchasing the home. Unlike other mortgage programs, the FHA and USDA loans must meet appraisal guidelines and Department of Housing and Urban Development (HUD) property guidelines. So your appraiser will look for:
The lot to be positioned so drainage moves away from the house, not toward it
Handrails alongside steps and stairways
A foundation that can withstand “all normal loads imposed on it”
Proper ventilation and fully functional mechanical systems
A roof that keeps moisture from entering the home (a roof that needs to be replaced within 2 years must be reported)
Lead-based paint jobs (often in homes built before 1978)
Defective paint on properties built after 1978 (chipping, peeling or flaking paint)
Evidence of termites (though termite testing is not required by the FHA)
For a complete checklist of these and other appraisal requirements, refer to HUD Handbook 4000.1.
10 Tips For Preparing For A Home Appraisal
As a Realtor® I have learned a thing or two about preparing for an appraisal. These home appraisal tips are here to tell you how to prepare your home for an appraisal and effective actions for increasing your home appraisal value. I have also included a downloadable home appraisal checklist to prepare for a home appraisal.
1. Don’t Get Your Own Appraisal
First, getting an appraisal before selling your home is a waste of time and money. The only appraisal that matters is the one ordered by the buyer’s lender. Instead, let’s focus on what to do regarding the appraisal that does matter.
2. Cut The Grass
The outside of your home should be well kept. The outside is the appraiser’s first impression of your home. Additionally, the appraiser is going to walk around the yard to view it and the home’s exterior. Make sure the yard is free of any trip and fall hazards. Clean up any dog mess in the yard, too. You wouldn’t want to ruin the appraiser’s day by having him or her step in a pile of doggy-doo.
3. Clean Your House
Cleaning your home is the best thing to do before a home appraisal. Treat the home appraisal like it is the most important showing because at this point it is. You want the appraiser to have a pleasant experience while appraising your home. This means your home should be neat and clean with everything in its place. No dirty laundry, dirty dishes, or overflowing garbage cans.
4. Staged To Sell
Using what you have, make the space inviting, warm, and desirable. Just like when you were showing the home you want to have a high aesthetic sentiment in the home. This is the feeling of positive vibes you get from seeing and being in a space. Have the lights on, doors open, and the shades and drapes up and open. Do whatever staging you were doing for showings, too.
5. If It’s Broken, Fix It
It is likely by the time you have an appraisal you have already had an inspection and may have agreed to fix some items. For this section, I am talking about fixing open and obvious items. A door handle, a light switch, or some other common item that any visitor would see. If you’re trying to get the top dollar for your house, make the effort and fix anything openly and obviously not working correctly.
6. Easy Access
All parts of the home should be easy for the appraiser to access. This includes scuttling hatches into attics. Some appraisers are more thorough than others. Some loan types require a more thorough review of the home, too. Again, you want the appraiser to have a pleasant experience in your home. Don’t make the appraiser have to figure out how to access parts of the home.
7. Be A Wallflower
If you decide to be home and present during the appraisal try not to interfere. Guess what…it’s not the appraiser’s first day. He or she knows what to do. The appraiser does not want you to take them on the dime tour, talk their ear off, or anything else. Be courteous and just let the appraiser complete the task at hand.
8. List Meaningful Updates
Home appraisers do care about meaningful updates, and these will increase your home’s appraisal value. Communicate these updates by leaving a list of updates where the appraiser will find them. Note to the appraiser that he or she can take it with them. Also, include invoices for the work.
The careful part of this comes here. The appraiser really doesn’t care that you bought a $50 bag of grass seed and put it on the lawn last year. Instead, focus on more meaningful items. A recent kitchen or bathroom remodel, a new roof, new HVAC equipment, a new water heater, a recent interior or exterior paint job that covered 50% or more of the home. These are meaningful updates that can push the value needle upward. Include invoices if you have them. Do not put down budgetary figures from work you did yourself or estimated values.
9. Make The Appraiser Aware Of Multiple Offers
Let the appraiser know if your home received multiple offers at the same time. If you are working with a real estate agent your agent will most likely take care of this for you. If you are selling your home FSBO print out the other offers and leave copies of those for the appraiser.
10. Don’t Run Comps Or Provide Examples Of Comparable Home Sales
I’m going to keep this really short to prove my point.
How about I show up at your job tomorrow and tell you how to do it despite the fact I have never done your job for a day in my life? That doesn’t feel good, does it?
Yep, that’s what I thought. Don’t try to run comps and give those to the appraiser.
Dealing with a low appraisal
Get a better purchase price
If you’re buying a home, you can use the low appraisal to your advantage. Just ask the seller to match the appraisal price. If the home was overpriced or the value was inflated, this is often the best solution.
Challenge the appraisal
So you’ve followed the home appraisal checklist and have done everything possible to increase your home value, yet it’s still lower than you hoped. This can be troublesome for your mortgage refinance because a low appraisal can mean a higher loan to value (LTV), which can affect your interest rate.
Don’t fret. You may be able to dispute the appraisal. After all, it is a subjective figure meaning it could have been incorrectly calculated.
If you have documentation to show there are better comps to measure your home against, or if your lender used an appraisal company that’s not local, call your mortgage lender to discuss your possibilities. Maybe it’s scheduling a review with a different appraiser, or maybe they can request a formal reconsideration of value from your current appraiser.
The reconsideration of value process does not mean a new appraisal is performed, nor is there an opportunity to use a “different appraiser”. Instead, you can work with your lender to present facts that may have been overlooked or omitted by the original home appraisal.
Keep in mind, only one reconsideration of value request may be submitted, and it may or may not result in a change to the home’s appraised value. The commentary provided must comply with Appraiser Independence Regulations (AIR) and Dodd-Frank compliance.
Cancel the transaction
If you’re the home buyer and you’re unable to get a better purchase price or a second appraisal, you may be able to walk away without losing your earnest money. Many purchase contracts contain a loan contingency if the appraisal comes in low. A properly written loan contingency allows the buyer to cancel the contract and requires the seller to release the buyer’s earnest money deposit.
At the end of the day, the most important point is that you have the ability to help increase appraisal results by maximizing your home value. You’re certain to find success when following the above home appraisal checklist.
For more information about home equity, visit our popular Understanding Home Equity pages.