The topic of home values continues to be a hot issue. In times of economic uncertainty when property values are decreasing, sellers and even listing agents will question and pick apart appraisals. Meanwhile, during economic growth as home values are just going up, the majority of homeowners don’t question appraisals much, if at all.
The appraisal process itself has remained the same, so it’s simply the economy and therefore fluctuating home values that ebb and flow. That being the case, here are four top appraisal myths that often leave sellers reeling:
“I just put $10K into freshening up the property, why isn’t the appraised value higher?”
Even with cosmetic fixes and “freshening up,” it’s likely that the home will remain comparable to the foreclosed property next door than a newer home several blocks over. There is a certain hierarchy of items that need to be addressed; first off, look at the electrical and HVAC. If those are updated, next follows the number of bedrooms and bathrooms plus square footage, and lastly, the genuine cosmetic state of the property.
“The appraiser included foreclosures as comps.”
As much as we may not like it, foreclosures unfortunately play a part in the total comp analysis. If you live in a neighborhood where there have been several (or many) foreclosures, then an appraiser has no choice but to use these recent sales as comparable values. Therefore, neighborhoods with higher foreclosure rates will depress values.
“But I just put in a pool and expensive landscaping – shouldn’t that increase the value of my home?”
Pools and professional landscaping rarely see a dollar for dollar value add on a property. The value is mainly based on the comparable sales of homes similar in size, number of bedrooms, lot size, etc. within the same neighborhood.
“How can similar homes in the same neighborhood appraise for such different values?”
Additional square footage and the number of bedrooms can be one of the main reasons for one property appraising higher than a neighboring home. Even though values in a particular neighborhood may be rising, each individual property needs to be equal in improvements as the others in order to see similar appraisal numbers.
Do you have any questions regarding the appraisal process for your home? Call us
and we’ll be happy to help you make the choice that’s right for you.