Talking Points
- When it comes to assessing a home’s value, homeowners tend to be overly optimistic. However, appraisers are much more cautious, as they have to predict a realistic value for the home that the bank can use to extend credit to a buyer.
- There are five areas where homeowners often misjudge the worth of their abode: The outside, basic systems, the basement, the market, and a remodel.
- On the outside, if an appraiser sees overgrown bushes and chipped paint, he is likely to slice as much as 3 percent off the value of an average-size home. According to one appraisal firm, that’s because curb appeal is important, and an unkempt yard is a sign that there may be other issues.
- A brand-new roof generally does not affect the value an appraiser assigns a house; however, if a roof is in disrepair, a homeowner should replace it to increase the chances of a buyer making an offer.
- A recently finished basement with a half bath can add as much as 2 percent to the value of a home, but homeowners shouldn’t expect the value to increase as much as it would with the addition of first-floor space, which can increase value by as much as 20 percent.
- Although similar homes in the area may have recently gone into contract for more than the asking price, this will have little to no effect on the value an appraiser assigns a house. Appraisers are bound by the data of recent comparable sales, meaning he must abide by the actual sale prices of homes in the area.
- An expensive, custom-made, built-in entertainment center may be perfect for the current homeowners, but it could lead the appraiser to make a negative adjustment to the valuation because cost doesn’t equal value. Renovations that are trendy will be assessed at the cost of ripping them out. Timeless improvements, however, such as deep sinks or new wooden cabinets will add value.