When selling your home, one of the most important things for you to know is its appraisal value, defined as the amount that a professional appraiser deems your property to be worth. It usually becomes a part of the conversation when a buyer applies for a mortgage because lenders base borrowing limits on a home’s worth.
Appraisal value is different from market value, which is the price that someone is willing to pay or be paid for a home. Your final selling price will determine your home’s market value, though you and the buyer will float asking prices and offers based on your respective estimates. An appraisal can help you to navigate this process with more authority.
Why Do I Need to Know the Appraisal Value of My Home?
For the seller, an appraisal provides an objective, professional opinion. Your agent’s estimate will be based on their experience and how much they think you can get for the home, and your buyer will be looking to get the best possible value. Your appraiser is unbiased and has no one’s interests in mind when determining your home’s worth.
Knowing the appraisal value of your home also reduces the chances that the sale will get delayed during the mortgage approval process. Some buyers back out if they find that a property is valued at less than what they offered to pay — or they’ll try to talk you down. Also, lenders base their offers on a home’s estimated value, so a low appraisal could reduce the amount that the borrower is approved to get.
If you know your appraisal value ahead of time, you can price the property accordingly and avoid surprises.
What’s Involved in Getting an Appraisal Value?
If you choose to get an appraisal, your first step will be finding a professional to do it. Look for someone who’s licensed in your area and experienced in appraising your type of property. If you’re not sure where to start, ask your agent for suggestions.
The appraiser you choose will come to your property and inspect it inside and out, looking at all of the factors that determine how much it’s worth. The final appraised value is good for roughly 120 days — or four months.
What Are the Most Common Home Appraisal Value Factors?
To determine a home’s value, appraisers consider the home’s permanent fixtures (not the paint, furniture, or cleanliness). Many follow the Uniform Standards of Professional Appraisal Practice, a set of guidelines designed to standardize appraisal. All will evaluate how your home is built, what shape it’s in, and what it’s like to live there.
1. Building Materials
A home’s worth is partly based on the building’s long-term structural integrity. In general, houses that are built with more modern materials will appraise for a higher value, whether those materials are original or the result of updates.
Appraisers also look at the structure’s overall condition and whether it has been kept up over time. An older house in good repair is likely to appraise for a higher value than a newer house with structural flaws, particularly if there have been major updates.
As a seller, you want to make sure that all of your home’s structural materials are known to be safe and of good quality. This means check for up-to-date:
- Electrical wiring
If you own an older house and are looking to improve your value outlook, these are good places to start.
Get a favorable appraisal report by using this home appraisal checklist.
2. Location and Current Market
Your home location makes a difference in how much it’s worth. A property in a neighborhood with low crime, good schools, and well-maintained streets will have a higher appraised value than a property in a less appealing area. Particularly appealing nearby amenities, like waterfront access or park space, can increase your appraisal value.
The appraiser may use the sale prices of nearby comparable homes to determine the appraisal value of your property. You may get a higher appraisal value if your home has certain appealing factors like a large backyard or extra distance from the road, especially if nearby homes don’t share those elements.
3. Curb Appeal
You may not judge a book by its cover, but your appraiser will judge your home based on what it looks like from the curb. You don’t have to have expensive prize roses lining your front walk, but the house should look well-kept and neat.
Improving the curb appeal of your home may be one of the easiest ways to increase the appraisal value. Shop around for an affordable, well-reviewed landscaper in your area and get an estimate on a spruce-up. Get rid of dead trees and bushes and replace them with low-maintenance plantings and ground covers. While you’re at it, make sure the paint on your door is clean and any stairs or porches are in good repair.
4. Amount and Arrangement of Living Space
One of the primary factors an appraiser will consider is your total square footage — in particular, how much of that square footage is livable space. You may get a higher home value for:
- More bedrooms
- More bathrooms
- More storage space
- A garage
Hardwood flooring is also likely to get you a higher appraisal value, especially if it replaced carpet or damaged older flooring.
5. Recent Renovations and Updates
Appraisers will consider recent improvements you’ve made to your home, but be aware that there won’t necessarily be a dollar-for-dollar value connection. A minor bathroom or kitchen remodel might significantly increase the appraisal value of your home, often paying back what you spent on it, but luxury improvements like a chef-quality kitchen or pool may not. In general, the improvements that make a difference will be those that impact the overall condition and state of upkeep on the home.
The Last Word on Appraisals
If you’re asking “What is the appraisal value of my home?” and you’re looking for a dollar-value answer, you’ll need to get an appraiser to come and look at the property. That said, you can get a preliminary sense of your home’s appraisal value by considering the overall structure, layout, and neighborhood. What shape is it in, especially compared to its past condition and nearby neighborhood homes?
Every home is different. Think about your home — what do you think would make the biggest difference in its appraisal value? Talk to a real estate expert to be sure you’re prepared for the appraisal process.