I read Money magazine, and, every now and then an article comes along that sparks my interest and I have to share it with the world! The author Allison Rogers goes into 5 details that homeowners think are going to bring back the big bucks when it comes to an appraisal; but they, in fact, may break the sale instead of make it.
First thing’s first though. What is an appraisal? An appraisal occurs typically after a home is under contract and is a valuation of the home you are either buying or selling. A licensed appraiser comes to the house, looks at the amenities, condition, and other aspects of the home. Then they compare this home to recent closed homes that are like yours. This creates an appraised value that either exceeds or does not meet the contract price on the home. If it does not appraise, the buyer of the home has the right to ask for the lower price from the seller. If the seller refuses, because a bad appraisal will mean the seller will have to bring money to close, then the contract is “dead in the water.”
Allison Rogers with Money magazine says here are the five factors you may be losing money on when it comes to appraisals…
- Curb Appeal. An appraiser will take off up to 3% if your front yard is unkempt. Main reason why? If your front yard looks bad, it’s an indicator that the inside of the home isn’t much better.
- A New Roof. An appraiser will hardly ever add value to your home based on a new roof. It’s a given that the roof on your home be relatively new and functional. As Rogers says “just as a knee replacement won’t make you look 20 years younger, a new roof…isn’t considered an improvement to your home.” Though it won’t boost the price to have the roof replace, it will definitely help with the sale.
- An Updated Basement. The appraiser may only add about 2% to your home’s value. Not too many people aware, but subterranean rooms aren’t appraised at the same rate that the above ground rooms are. Even if you have added a bedroom and a bathroom, especially if there is only one other bathroom in the house, you won’t get much return in the end.
- The Recent Sales Down the Street. Allen Tate has a great program called the Market Report (click on the link to find out more…you can also sign up here ) that offers home owners a free report of recent listings, sales, and closings. The difference between a sale and a closing is that a sale is still not set in stone as far as price goes. A closing, however, is the final word in the market value of the home that sold, and closings are the home prices that appraisers focus on. Even if the sales down the street are well above the asking price, it will be more beneficial to you to wait until these recent sales have actually closed.
- Home Remodeling. This is touchy, because trendy new renovations like built-in entertainment centers, whirlpool tubs, and screened porches may actually make you lose money on an appraisal. When an appraiser is evaluating the property, certain projects will be discounted based on the cost it will take to rip them out if the buyer doesn’t find the same value in them that you do. The best thing to is in have your listing agent tell what buyers are really looking for. Need an experienced professional? Click here!
So, beyond the doom and gloom, there is a silver lining. The article offers four improvements where you will see your money come back to you.
- Updating the landscaping will show you an increase of up to $5,000!
- Adding stainless steel appliances to the kitchen will improve the valuation up to $7,000!
- Refinishing the wood floors in the home will increase the price up to $3,000!
- Creating a walk-in closet will show you a return of up to $2,000!
I will be back this afternoon with a Treehouse related post, but I was just itching to share!