The Appraisal Procedure
An appraisal determines the cost and market value of your home; what it would cost to buy the house brand new. This idea is known as your “home value.” There are a number of things that can affect the value of your home. Renovations can often increase, and sometimes diminish the value of your home (for example that hot tub you thought looked so cool in your living room – may not look so cool to everyone else).
What is an appraisal?
If the appraiser works for a mortgage company or lender, typically you will not have a fee. He or she will compare their assumed value with local county data and values of nearby similar properties to determine the final market value of the property. Here are a few things appraisers appraise:
- Size – Square footage of the home and dimensions.
- Bedrooms and bathrooms –How many in the house?
- Porch, deck or patio – Does the house have one or all of them?
- Appliance condition –The appraiser also documents the condition of all appliances and major systems in the house (Note: only built-in appliances are documented, i.e. an air conditioner or garbage disposal. Because appliances like a washer and dryer or refrigerator are often taken by the pervious homeowner, they are not a part of the appraisal.)
- Pool? However fun and beautiful that in-ground pool and sundeck may seem to you, in most markets pools do not add value to a home. Considering the cost of labor and upkeep they can, however, sometimes lower the home’s value;not all buyers want the extra home maintenance.
- Major damage –Foundation or roof issues could affect the home value.
- Location –An appraiser will also take notes about the location, including what kind of neighborhood/community, crime, graffiti, etc.
An appraiser will compare your house to:
- Other similar houses in the area – Similar style, age, size and number of bedrooms and bathrooms (listed in the last 3-6 months).
- Local county data –What is generally believed about the neighborhood?
- Crime statistics - Is the neighborhood a safe one?
In addition to the appraisal, you might need to have a physical inspection performed by a licensed home inspector before or after the appraisal. You can hire one yourself to see what kind of repaires you need to make, or you can wait for your prospective buyer to hire one. A home inspector is typically a contract employee and will charge for services. What does a home inspector look for you may ask?
- Damage – An appraiser has a trained eye for mold, termite and water damage –so take care of that first. Other less obvious repairs may include a leaky faucet, a furnace that doesn’t work, or faulty plumbing. Be sure to check the roof and the gutters as well, and make sure everything is in the condition it should be.
- Updates – This should go without saying…but everyone appreciates a working oven. Make sure all your kitchen and bathroom appliances are updated and in top working condition.
The appraiser and the home inspector will always deliver a final report which might include all of or portions of the following:
- Size and condition of the house
- Structural problems/major damage
- Comments about any home renovations
- Details about appliances –updated or outdated
- Possibly maps, photos and sketches of the property
- A detailed market analysis
- Notes about the neighborhood