A home appraisal is an unbiased expert opinion about the value of a home. Home appraisals protect buyers from overpricing and protect banks from potentially getting stuck with a property worth less than the value of the investment.
Many factors go into the appraised value of a home — some are beyond your control while others are well within the seller’s power to optimize. Knowing what these factors are will help you know what to expect and what you can improve to get the most value out of your home.
Here are seven main things that factor into the appraised value of a home.
Other Comparable Homes
A home appraiser will look at how much other homes in the neighborhood or similar homes in other areas have sold for recently. Although you may not know how the inside of the other homes look, looking at other comparable homes yourself can give you a good starting point for understanding what your own house is worth.
Location matters! Many homebuyers are looking for more than just a house — they are looking for a good community. They want their children to go to good schools and they don’t want to worry about crime in the area. This means that a significant portion of your home’s appraised value will come from where it’s located.
There are two factors to consider for size — the size of the house and the size of the property. In both cases, bigger is better. If the house is large, more people can live in it, and if the property is large, the next homeowner can make additions to the house. Both situations are more desirable to buyers, and will thus increase your home’s appraised value.
The age of a home can be either good or bad for your house’s overall value. If it is in one of several Chicago historic districts, an older house could be a huge asset. In the suburbs, however, age can be seen as a disadvantage because the construction and amenities are probably not up to date.
The interior of the home is what potential buyers will have to live with every day, and many don’t want to put in extra money to change the interior, especially if they just spent a lot on buying the home in the first place.
If your interior needs some sprucing up, consider updating your appliances, redoing your floors and countertops, putting in new cabinet doors or hardware, painting your walls neutral colors, or putting in more modern fixtures.
Your home’s appraised value will also include any damage inside (and outside) of the home such as leaks and holes. So it’s best to have any major issues addressed before the appraiser comes.
The interior isn’t the only thing people want to look nice — the outside of your home must be just as presentable. This includes landscaping as well as the exterior paint, shutters, roofing, porch banisters, and other aesthetics.
An appraiser will also look at the work you’ve put into improving your home, especially replacing major permanent appliances, updating fixtures and floors, and any remodeling. Since some of this work can go unnoticed, it’s important to provide your appraiser with a list of improvements and renovations.
A home’s appraised value doesn’t follow an equation — the same factors don’t always carry the same weight in every house. However, by knowing what affects your appraisal, you can take steps toward boosting your home’s value.