House Appraisal

How Appraisers Determine a Home’s Value

To get a loan on a house the lender needs to verify that the collateral for their loan (the house) is worth what you’re paying for it and hence what the bank is backing financially. To do so, the lender gets a third party appraisal to determine the value.

There are several factors that are considered by an appraiser when he or she determines the value of your home. These are as follows.

Location

The neighborhood where the home is located plays a big role in your home’s value. Here are some elements that make for a great location.

·        Low crime

·        Good schools

·        Walkability

·        Well maintained streets and nearby properties

·        Close to a hospital, police station and/or fire station

·        Located in a suburban neighborhood near to a city

·        Located on a quiet street

·        Nearby houses are occupied and there are not a lot of foreclosures in the neighborhood

Structure

Homes with updated structural elements such as electrical, roofing, doors, windows and siding tend to be appraised for higher values. Solar panels and finished basement can also contribute to the home’s value.

Age of the Home

The age of your home is a major factor in determining its value, but new homes won’t necessarily appraise higher than older homes. While a home that was built in the last 10 to 20 years may appraise higher due to the fact that there’s less chance of damage, a historic home that’s in great condition will also be in demand.

Curb Appeal

A home that looks great from the outside will get a higher appraisal value. Consider painting the exterior, improving the landscaping and adding other outdoor amenities to raise your home’s value.

Number of Bedrooms and Bathrooms

It should come as no surprise that homes with more bedrooms and bathrooms will sell for more money. However, if a house has more bedrooms than most families need, and this contributes to a higher selling price, it may be hard for sellers to find buyers.  

Square Footage

Once again, the general rule here is, the bigger the better. However, sellers should be aware that not all the space in their home will be considered in determining its square footage. This will only apply to the property that is usable.

Heat and Air

Homes with central heat and air will appraise higher than homes that have individual units. Outdated heating systems that aren’t as energy efficient can bring down a home’s value.

Storage Space and Garages

The amount of storage space in your home will also increase the value. Homes with plenty of closets, usable basements and attics will appraise highly. A garage that has room for several cars is another asset.

Home Renovations

If your home was renovated since its last appraisal, it may help to increase the value. New doors, windows and flooring can be especially beneficial.

The Real Estate Market

The real estate market will also affect your home’s value. If your home is appraised when it’s a seller’s market that is saturated with buyers and not enough property to meet the demand, the home will appraise higher. On the other hand, if it is a buyer’s market with tons of sellers and not enough buyers interested, the home will appraise for less.