Home appraisals are a fact of life for buyers, sellers and anyone who needs to refinance a mortgage loan. It’s the appraiser’s job to make sure that the lender doesn’t become overextended by providing more money than the property is worth.
If the appraiser’s opinion isn’t in harmony with an agreed upon sales price, that can create a huge roadblock. An appraisal that comes in low can also bring a home mortgage refinance to a screeching halt. That’s why it pays to do whatever possible to boost the value of your home before the appraiser is called. Any improvement will obviously help, but some home improvements provide a much bigger return for each dollar spent.
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Inexpensive & Cheap Home Improvements
Before spending a bunch of money on home improvements, there are a number of small things to do around the house. One of the most important tasks is to clean the place up, remove any clutter and perform all of the small repairs that have been pushed under the rug over the years.
Any cracked drywall, missing tiles or flaking paint can cause an appraiser to assume the home is in a state of disrepair. If trying to sell your home, the property will also be more attractive to buyers if you fix these small items.
The most cost effective improvements that can be made around the house are actually in your yard. If there’s any clutter in the yard, it should be removed. The lawn should also be mowed, and the leaves should be raked. If the grass isn’t in good shape, then consider re-sodding it. Flowers, ornamental shrubs and other inexpensive items can also increase curb appeal and add value.
If your house has any unfinished space, that’s another area that can be concentrate on. Finishing a basement can add a lot of value, especially if a bathroom or bedroom is added (income property anyone?). You will typically also see a good return on investment if the kitchen or bathroom are remodeled. Additions are typically a losing proposition that tend to cost more than they add to the bottom line.
Going Green Can Pay Green
Studies have also shown that improvements in energy efficiency can add tremendous value to a home. The easiest way to increase your energy efficiency is to replace all of your old appliances. Energy efficient appliances are costly, but any savings on your utility bills will translate directly into an increase in the value of the home. Appraisers sometimes don’t take that into account, so you may need to have the information on hand and plead your case.
Inform The Appraiser
Consider gathering other information that may convince the appraiser to bump up your value. Appraisers use comparable home sales in their calculations, so make sure that they are using the highest sales prices possible. If using a real estate agent, you can ask for a list of comparable sales in the area. Also ensure the appraiser has all the correct information about your square footage, amenities and non-standard improvements that might set your house above other homes in the area.
The appraiser is working for the lender and has the lender’s interests in mind. That’s why it’s so important to make sure the appraiser knows about all of the improvements that have been made. Providing the appraiser with all the information possible will help him do his job better, and it can also help you arrive at the value needed for a home loan or successful sale.