Real estate appraisals are powerful, particularly in today’s nervous market as loan underwriters take a more skeptical approach to approving mortgages for buyers and homeowners have more trouble qualifying for home equity loans.
Real estate appraisals are powerful, particularly in today’s nervous market as loan underwriters take a more skeptical approach to approving mortgages for buyers and homeowners have more trouble qualifying for home equity loans. The appraised value of a home is, after all, the benchmark banks use to calculate collateral, so it directly affects sales prices. Even if a buyer offers a higher price the sale will not go through – unless it is a cash sale not involving a mortgage – until the lender’s appraisal supports and validates the offering price. When the appraisal report comes in too low, for instance, the loan is denied and the buyer either walks away or the homeowner agrees to sell at the lower price.
But although most homeowners understand ways to make their property more attractive to buyers – by boosting so-called curb appeal, adding a fresh coat of cosmetic paint, cleaning out clutter from closets, or adding a wreath to the front door – they are not sure how to impress a professional appraiser. And while it is not possible to sway a legitimate appraiser bound by stringent laws and codes of ethics, it is possible to add real value to a home by ensuring that the home has features that will be noticed by an objective appraiser and leave a positive impression.
Here are a few items that appraisers typically pay special attention to when calculating the value of a home, with tips for how to improve the chances of having the appraisal report reflect higher sustainable value:
· Appraisers use several key determinants to arrive at value. There are many different types of appraisals and each has its own particular criteria and formula for evaluating a property. But the primary focus of most residential home appraisals is the location of the home, the amount of livable square footage, and the condition of the property. Location cannot be changed once a home is built, but room additions, home maintenance, and home improvements are options available to the homeowner wanting to boost value.