If you find a buyer for your house but your house appraises below the agreed-upon price, you might have to lower your sales price. This is because the house appraisal industry now operates under tightened regulations in the form of the Home Valuation Code of Conduct (HVCC) implemented in 2009 which has resulted in real estate appraisers tending to give more conservative estimates than they once did. Lenders won’t grant a mortgage for more than the house is worth, and even if a buyer has the cash to pay the difference, the deal often dies.
How big is it?
According to the American Society of Appraisers, the best way to improve the value of your home is by adding square footage. Beauty and aesthetics are important to buyers, but the number of square feet matters most to the appraiser. The same goes for the garage: the bigger, the better. Buyers and appraisers see dollar signs when they see the extra storage space.
But before you go doubling the size of your house, consult with a local appraiser to get a cost-benefit analysis. Your appraiser will estimate how soon you'll break even -or if at all. Having the largest home in the neighborhood hurts more than it helps. Paying for a professional appraisal beats making an expensive renovation mistake.
Counting Bedrooms and Bathrooms
Appraisers count the number of bedrooms and bathrooms in a home and attribute value to each one. However, as I mentioned before, don’t over-improve your property for the neighborhood, because you won’t get your investment back at resale. If the largest house in your neighborhood has 3 bedrooms and two bathrooms, having five bedrooms and four baths is going over he top.
Kitchens, Kitchens, Kitchens
Though the kitchen functions as the heart of the home, don’t go crazy with renovations. If no one else on the block has granite countertops and custom cabinetry, you shouldn't install them. Conversely, if you’re the only owner on the block with old laminate counters, consider updating the surface. Make your home as nice as homes in your neighborhood – no more, no less.
The Little Things Count
You’ll get a lot of bang for your buck by doing simple projects, like landscaping the front yard or replacing old faucets and dirty carpet. Installing new fixtures and painting the walls a shade of white, beige or gray are your best bets, according to the Appraisal Institute. It’s not necessary to go overboard with major updates, especially in a soft real estate market. And make sure you get permits as illegal improvements might actually hurt the appraised value.
Help the Appraiser
If you’ve added significant but unseen improvements, bring them to the attention of the appraiser. List features such as underground sprinkling, central air conditioning, in floor heating or other concealed improvements. You or your real estate agent can also give the appraiser a list of recent comparable sales in the area, highlighting any features that might make your home more valuable like fireplaces and decks. Though you’re not permitted to influence the price, you can provide data.
MORE:
Getting the Best Price for your Home | Curb Appeal | Home Selling Tips | Home Renovation
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