What Decreases Value During a Home Appraisal?
What Decreases Value During a Home Appraisal?
When you decide to sell your house, you obviously want to get as much money for it as you can. It’s likely the biggest investment you’ve ever made, and you want to get a nice return on that investment.
It’s assumed that most houses increase in value over time, but there are additional steps you can take to increase the value of your home. Unfortunately, there are also factors that can decrease the value, so you need to be careful.
According to Home Appraising Group, home appraisers in New Jersey, “The hard truth is that not every house and neighborhood will maintain positive value over the years. Try to settle on a median listing price and the face value condition of the house. A low appraisal may come as a shock, but until the reason is outlined, it is important to remain optimistic and respectful. Housing markets go up and down often, and comparables may be the reason for such a low valuation. Unfortunately, this is out of an appraiser’s hand but something you can plan with a Real Estate Agent.”
These factors can be split into two different categories: In Your Control and Not in Your Control. We’ve listed a few of these factors below.
Appraisal Issues in Your Control
Bad Curb Appeal
The first impression the appraiser will get is the view of your home as they pull into the driveway or in front of the house. If it’s a bad impression, you’re already getting dinged, regardless of what you did inside the house.
Do some basic landscaping and get rid of any clutter. Also, make sure the front door and house number are clearly visible. It’s not a good start if they get lost trying to find your house. Everything should be done to make the appraiser’s job go as smoothly as possible.
A Messy House
Once they enter the house, it should be as clean on the inside as you made it on the outside, if not cleaner. Any unnecessary items should be moved to your new home or put in storage.
Once you’ve gotten rid of the clutter, you can do a deep cleaning. Make sure it’s the cleanest it has ever been; try to open up space as much as possible.
If you’re not still living in the house, you should consider staging it. Make everything as basic as you can. Give them an idea of what space could be used for without adding your personal touch.
Speaking of personal touches, did you just renovate your kitchen or install a pool recently? Do you think that will raise the value of your home? In truth, it depends.
A kitchen renovation has a good chance to increase the value of your home, but it can also decrease the value if the style isn’t basic enough. A quirky kitchen might be nice for you, but it won’t necessarily be loved by all. If you’ve personalized your kitchen for you, you’ve just given the new owner more work to do when they need to personalize it.
And a pool comes with a ton of work no matter what. Not everyone is interested in that. It could end up being filled in by the new owner, costing them more money and creating more work.
In general, if your renovation doesn’t make it easier for them to move in and start using the space as is, you’re likely going to see the value of your home decrease. If the renovation makes space more immediately livable, you could see the value go up.
Appraisal Issues Not in Your Control
If your house is in a bad neighborhood or a neighborhood that has become bad, then the value is going to be lower than a comparable home in a good neighborhood. There’s not much you can do about this.
A house near an airport, railroad tracks, or a junkyard is most likely going to have less value than a house that isn’t near these eye and ear sores. And a neighborhood with high crime rates and bad schools is going to have houses with a lower value.
It’s not impossible to get involved in your community and make improvements, but you’re not likely to make big enough of an impact before you’re ready to sell your house. You can only control your immediate area.
You might have a bit more control over bad neighbors if you have good relations with them. Ugly and messy homes near yours can lower the value of your own home, no matter how nice yours might be.
If you can at least convince your neighbors to clean up the exterior for the appraisal, that can actually help improve the value of your home. Make a weekend out of it and offer to help out if you have to. You might even get them to start a new good habit.
Quick Sales Due to Death or Divorce
If someone is desperate to sell, they might take a low amount and be done with it. If this house is factored into comparable homes in the area, it can hurt the value of your home. Death and divorce are the top two reasons someone might want to sell a house fast.
You could research every home in the area and find out if any were sold due to death or divorce, but that would take a ton of research. And when you present it to the appraiser, there’s no guarantee they’ll keep that research in mind.
Foreclosures & Bank-Owned Sales
If death and divorce are the top two reasons for a quick sale, foreclosures and bank-owned sales are three and four. In this case, the bank took the house and is trying to sell it to make back some of the money they’ve lost.
If there are a lot of these in your area, it likely means the housing market is bad. You might want to wait to sell until the market picks back up. If this isn’t an option, you’ll unfortunately just have to take a lower price.
Do you have some work to do now? Let us know how your preparations are going in the comments below!