When you’re selling a home or looking to refinance one, an appraisal is likely to be part of the process. The job of the appraiser is to determine what your home is worth on the current market, which may be a very different number from what you paid for it.
If you’re fortunate, your home will have risen in value during the time you’ve lived there, making selling it at a profit or successfully refinancing your mortgage easier. But if the appraiser puts a lower value on your home, as was common during the recent real-estate slump, you could have trouble recouping your money when you sell or being approved for a new mortgage.
The appraisal process is meant to be coldly objective. Appraisers look at such factors as your home’s square footage, materials, amenities and condition. Then they research comparable properties, or “comps,” that have recently sold in your area to determine a market value.
In other words it’s unlikely that you can simply charm an appraiser into thinking your home is worth a lot more than it is. Save the fresh-cut flowers on the dining room table and cookies baking in the oven for when you’re showing the place to potential buyers.
Seven Ways To Boost Your Home's Value
What can you do to ensure as high an appraisal value as possible? Here are some tips from the experts.
1. Spruce it up. To make sure your home looks its best when the appraiser arrives, take a cue from professional home stagers, who prepare properties for showing to buyers. De-clutter, make minor repairs and touch up the paint if necessary, suggests Marie Graham, who runs a staging business called The Refreshed Home, in Westchester County, N.Y. You’ll want to do that anyway if you’re selling your home, so you might as well get started. And even if you’re simply refinancing, you probably don’t want your dirty dishes or messy desk immortalized in the appraiser’s photos.
2. Don’t forget the outside. Even before the appraiser reaches your door, he or she may be taking notes. Unless your yard, if you have one, is a total disaster, it’s usually a waste of money to invest in elaborate landscaping. But a little clean-up can be worth the weekend or two it might take you. For example, M. Lance Coyle, a Dallas-based appraiser and current president of the Appraisal Institute, suggests tearing out any dead trees or bushes that detract from your home’s appearance. Graham says she often advises her staging clients to make simple fixes such as repairing their walks, sealing their driveways and putting numbers on their mailboxes.
3. Collect your own comps. If you know of similar homes in the neighborhood that have sold recently, don’t hesitate to call them to the appraiser’s attention, Coyle says. The appraiser may not be as familiar with your area as you are and could miss a comp that would work to your benefit. The appraiser might even appreciate the help.
4. Point out any major improvements. For example, if you recently replaced your roof or added a new patio, mention it, Coyle says. But don’t make major improvements now in hope of increasing your home’s appraisal or resale value. Few such projects ever recoup 100% of their cost. For example, a major kitchen renovation currently costs close to $57,000 on average but returns only about 68% of that, roughly $38,000, according to Remodeling magazine’s “2015 Cost vs. Value Report.” In fact, the only project that it found broke even was replacing an entry door with a steel one: average cost, $1,230; average return, $1,252 – a $22 bonanza for your trouble.
5. Be available to answer questions. But resist the urge to trail the appraiser from room to room.
6. Appraise the appraiser. It’s also to your advantage to find out what kind of credentials the appraiser has, Coyle says. He suggests looking for designations such as MAI or SRA, both of which are conferred by his organization based on an appraiser’s education and experience. If the appraisal comes in lower than you hoped, that can give you some basis for judging whether it was due to unrealistic expectations on your part or possible incompetence on the part of the appraiser.
7. Know your rights. If you hired an appraiser yourself to determine your home’s value, the appraisal belongs to you. If you’re refinancing your mortgage and your lender is the appraiser’s client, the lender is required to provide you with a free copy of the appraisal and any other home value estimates, according to a 2013 Consumer Financial Protection Bureau rule. (You may still have to pay "a reasonable fee for the cost of obtaining the valuation.") When you receive the written appraisal, look for errors and also at whether you believe the comps the appraiser chose are reasonably similar to your home. If necessary, you can appeal the appraisal with your lender or ask it to order a second appraisal.
The Bottom Line
Do what you can to make sure your home is appraised for as much money as possible. But don't over-invest in renovations based on boosting your home's value; you probably won't recoup what you spend. For more, see What You Should Know About Home Appraisals and The Home Appraisal: Your Key To A Successful Refinance.