When you are getting a home appraisal, it is obvious that you would want to get a fair estimate price for your home, especially if you are planning to sell it. A low price will not be of benefit to you once you put your home out on the market. This is why it is important to do your research about the things that can hurt your appraisal before you get it done.
Once you are aware of the aspects or particular things that can hurt your home appraisal, you are giving yourself a higher chance to receive a more decent appraisal by doing what you can to avoid getting a really low quote. If you are appealing your property tax, make sure that you have also done some looking around, especially in your neighborhood, to possibly lower the taxes that you are currently paying for your taxes.
Depending on the reason why you are having your home appraised, it is crucial to know more about the trade. There are several factors that can greatly affect your home appraisal, and it can be based on problems with the market, with the appraiser, and most importantly, your home’s condition. Some are out of your reach, however, there will also be some things you can do to get appraisal value at a more desired range.
Here are the aspects that can hurt your home appraisal:
In terms of market and appraiser reasons
When you are planning to sell your home, the condition of the market at the present time will greatly affect the value that the appraiser will put on your home. Also, another factor that can be a reason for too high or too low appraisal value is the appraiser that you or a company hired.
- When the market demand is too low
The current condition: If you are in the process of planning to sell your home, getting an appraisal will be worth the effort. When you have your home appraised, you will be able to get the price of your property at the current market. However, the value will absolutely depend on the current market condition. In the circumstance that the market is too saturated, this would mean that there are only a few demands of the property from buyers and customers, and that it would be difficult to sell a house at the moment.
If this is the case, the value that your appraiser will put on your home will be significantly affected.
Is there something you can do about it? Sadly, there is nothing you can do about it. If you can afford to wait for a few years, you can opt to have your home appraised by the time when the market’s condition is better. You can still proceed with the appraisal for now if you really need it, but expect to receive a much lower appraisal value.
- When the market demand is too high
The current condition: In the opposite event of a saturated market, a market can be hot, meaning there are high demands at the present time and that there are many interested buyers looking for a property. Even if this sounds great, from a seller’s perspective this can be bad, as it can be a factor of a decrease in their home’s appraisal value. How does this happen? Some owners might be in a rush to sell their property to take advantage of the demand and may settle for a lower price, while some real estate agents also want to get their client’s properties sold as soon as possible and can result in a not so accurate appraisal.
Is there something you can do about it? You cannot do anything about the market, but you can do something about when you will order your home appraisal. You can opt to do your appraisal at a much later time or still order one while keeping the current condition of the market in mind. If you are planning to sell your property, you need to make the right condition and not settle for low ballers if you know the fair price of your property.
- When there are only a few appraisers in your area
The current condition: Appraisers and real estate agents are professionals that inspect your home to put a value on it. This value will be based on the current market condition and other important factors such as the number of rooms in your home, the state of the paint and other fixtures, and many more, for them to be able to arrive at an estimated price. In cases where there are only a few appraisers in your area at the time when you want or need to order an appraisal, this may be a problem. When there is a shortage of appraisers, your options are limited, and you may need to get one that does not have the qualifications that you want.
Is there something you can do about it? If you are having your home appraised due to mortgage or loan reasons, this is not your problem, as your bank or lender will be the one to hire an appraiser to do the inspection on your home. However, if you are hiring a third-party appraiser, this would mean that they are not connected to your lender, and you should be the one to find them. Ask around for any recommendations from your neighbors, as there is a high chance of them knowing an appraiser or realtor or two that can do business in your area.
- When there are too many owners having their homes appraised
The current condition: Imagine this, your neighbors and other homeowners near you are planning to sell their home, or are planning to get a loan or mortgage. If there is a high demand for appraisers at the present time, the appraisers in the area will also be swamped with work, which can be a reason why their efficiency and accuracy at work will decrease. Of course, this does not mean that all of them will not do great with their work, but some may produce not so accurate reports. Because appraisers and agents are humans, they can make mistakes, and may not notice some areas that need to be assessed properly, resulting in appraisal reports that are not as precise as they usually do.
Is there something you can do about it? If you can no longer wait for another appraiser and you need to get your appraisal done as soon as possible, there is nothing else you can do but put your trust in your appraiser. If the appraisal report is already at your hands and you do not agree with the value that the appraiser arrived in, you can give them a call depending on your arrangement to politely ask how they were able to come to their conclusion.
- When the appraiser you hired is still wet behind the ears
The current condition: Appraisers are licensed professionals that should have the right qualifications in order for them to be able to operate in your area. Depending on some counties, some may be stricter with their qualifications and will need their appraisers to pass an exam, while some may be more lax with their requirements. If you are getting your appraiser yourself, you will absolutely need to know about their qualifications, such as how many years they already have at the trade, if they have a license, how they work, and many more. This can help you determine whether they will do a precise and accurate job, as appraisals cannot be done by just anyone.
Is there something you can do about it? If you are the one hiring your appraiser and it is not up to the bank or lender, ask them about their qualifications before getting their services. Of course, this does not mean that newer appraisers will do a bad job, but those who have a much longer year in the trade will be able to guarantee a report that will be more accurate. This is because they usually have a more discerning eye and are able to put a fair value on your property.
- When there is a crisis
The current condition: Unfortunately, if there is a crisis or disaster at the present time, this can also be one of the reasons why there will be a decrease in your home’s appraisal value. When there is an earthquake, tornado, or wildfire that has recently ravaged your area, it will be obvious that it can greatly affect your property and other buildings around your location. Especially when the property is not in great condition, the price will surely dip when it will be inspected by an appraiser. Another example of this is the problem that has swept the world caused by COVID-19, which has affected everyone and resulted in lower sales of properties as there is not a huge demand for people who are not interested in investing to buy a home due to the current situation. Those who are interested in buying may find it hard to get a property as it is hard to schedule visitations due to the lockdown.
Is there something you can do about it? When it comes to an unforeseen crisis or event, there is nothing we can do but wait. If you are a homeowner who is hoping to get a decent price for your property, ordering an appraisal will be unwise when we are in a difficult time.
In terms of issues with the neighborhood and comparable properties
One of the most important factors in determining your home's appraisal value is its location, which can be 40% of the reason why your appraiser has reached an estimated figure. As we all know, location is very important, especially in the city, where most people would want easy access to other buildings to make their daily lives and commute to work or school easier.
Because of this, you need to know that your home’s location will greatly affect your home’s value, no matter what the condition of the market is.
- When there are too many foreclosed properties
The current condition: One of the factors why it will be possible to receive a lower price value is when there are properties near you that have recently been foreclosed, or if there is a comparative property that has recently been acquired by banks or loan companies. Comparative homes or comps are houses that are similar to yours in many ways, such as the location, the size, the number of rooms and bathrooms, and many more. Comps are compiled by your appraiser and will be used to determine a fair value of the property you are selling, which makes it easier for the appraiser to be able to arrive at a more accurate value for your home.
Is there something you can do about it? If there are many foreclosed homes in your neighborhood, that will definitely affect your home’s appraisal value, there is nothing to do about it as it will be beyond your reach, unless your appraiser will consider current market conditions. You can opt to invest in other ways to make your home’s appraisal value higher by other means, such as doing repairs, repainting, and etc.
- When the neighborhood is undesirable and unattractive
The current condition: When you take a drive into your neighborhood, some unoccupied houses and buildings can be a reason for a decrease in your home’s appraisal value. Though this can be unfair for most homeowners, unoccupied homes around their area could be a problem for buyers as they are unattractive and can be an eyesore, especially for people who value aesthetics and appeal. Aside from the issues with attractiveness, unoccupied homes can be a safety problem in the neighborhood as well, as there is a possibility of squatting and crime happening.
Is there something you can do about it? There is nothing you can do about your neighborhood, but you can do something on your own property to increase your home’s appraisal value.
- When the neighborhood lacks public and private amenities or features
The current condition: When you put yourself in a potential buyer’s shoes, one of the most important factors they would look into are the public and private amenities that are within close proximity into your property when you are looking for your home to be appraised for the main reason of selling it. For example, a property that is located in places that are near high-rated schools, hospitals, parks, and beaches will have a higher appraisal value compared to homes that are far from main roads, stores, and malls.
Is there something you can do about it? When your property is hard to reach or is too far for people’s convenience, there is nothing you can do but to invest in your own property.
In terms of the property to be appraised
Of course, the most important factor appraisers take into account is your home. There are several factors that can affect how high or low the appraised value is, such as the number of rooms, how old the house is, the condition of the paint, the quality of fixtures, and so much more.
- When the property does not have much curb appeal
Curb appeal is what your property generally looks like when you are viewing it from the street. This is the reason why real estate agents and other professionals recommend you to have your property landscaped even if you are still not planning to sell it, as it can be very beneficial when you do so in the future. As said above, many buyers would like to get a property that looks nice on the exterior as well.
Is there something you can do about it? Absolutely. To increase your property’s curb appeal and increase your home’s appraisal value, investing in landscaping will not be useless. Make sure to hire a professional that can give out their expert opinion and will do a great job in the beautification of your curb.
- When the property is dirty and unorganized
The current condition: When a home is unkempt and dirty, it will be very difficult to receive a high appraisal value. This is because professional appraisers will look into every nook and cranny of your home to make sure that they will arrive at a fair price estimate, and when your home is untidy, it can be hard for an appraiser to put a higher price if they see that it is not kept properly.
Is there something you can do about it? When you are ordering an appraisal, make sure to at least clean up some of the mess in your home, especially if they will be in the way of the appraiser to be able to do the inspection and assessment properly. If cleaning up will take too much time you know you do not have, there are businesses that offer cleaning services for you that specialize in making your home look good for the appraisal.
- When the property is poorly maintained
The current condition: When a property is not in a good condition such as spalling walls, holes on the roof, broken floors, and contains other defects, it would just be fair if it will receive a low appraisal value. After all, who would want to buy a broken home that will be very expensive to repair? When an appraiser will assess your home, they would inspect its value for prospective buyers, and the demand for a run-down home is minimal and even non-existent.
Is there something you can do about it? Before having your home appraised, hire a contractor to do the necessary repairs in your home. You may be surprised but it makes all the difference in getting your home in the best condition it can be in increasing your property’s value.
- When the property is unfinished
The current condition: Do you have an unfinished basement, kitchen, bedroom, or bathroom? Some homeowners have parts in their homes that are not completely constructed and stopped due to several reasons such as lack of funds, which can be the reason why their homes will have a decreased appraisal value. From a buyer’s perspective, most would want to have a house that is already complete and will not need more construction for their convenience. This is why appraisers do not give a high score to homes that will need more professional touches.
Is there something you can do about it? Whether you are getting an appraisal for your mortgage, loan, or for selling purposes, it would be best for you to shell out some money to complete the home.
In terms of the homeowner
Whether we may be aware of it or not, homeowners themselves can be one of the reasons why their homes will receive a low appraisal value.
- When the owner’s expectation is too high
The current condition: When homeowners are planning to sell their property, it would be normal to want and demand a high price to sell it, which is why most owners want to receive a higher appraisal value. Though appraisals will not be the sole determiner of the price a house will sell, an owner can ask for a higher price when they have a document they can show to buyers as proof of the property’s value.
If you are planning to get your home appraised, it would be best to manage your expectations beforehand. Some features in your home that you think would yield a high value may not be worth the same for the appraiser. Make an assessment of your home in a realistic manner and avoid putting a sentimental value on your property.
- When the owner did not put in any effort
The current condition: When a homeowner did not put any effort as mentioned above, and they did not do any measures before the appraisal happens such as cleaning or repairing their homes, it would be obvious that their property will not get a high appraisal value as they would expect. There are always some things you can do to make the value increase, and when an owner will not invest their time and effort to get a higher appraisal, they may lose a lot of dollars from the potential estimated amount they would probably get.
Should you get a second opinion?
When you are unsatisfied with the value that your appraiser has come up with, or just want to make sure that the value is fair in the present market, you can absolutely get a second opinion. Before hiring another appraiser or requesting another report, you need to remember that it is normal to receive a different estimate from other professionals, as the act of appraising will be subject to the appraiser’s opinion according to the data they have seen and gathered. Compare between the two reports and it is up to you to decide if one is more ideal than the other.
We are happy to hear from you. Contact us for any of your appraisal needs. From residential to commercial, divorce to estate tax and trust, we do it all.
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Fort Wayne, IN 46803