How Is A Home Appraised?
Appraised value and market value are not the same thing. Market value is used to determine the listing price of a home for sale, while appraised value is based on an inspection of the home to assess true worth. The appraisal of a home is typically done toward the end of the sale process when the buyer’s lender requires it to complete the loan process.
Appraised value is based on many of the same factors as market value and is conducted by a third-party licensed unbiased professional who inspects your home and property to assess its true worth. An appraiser will note repairs needed and anything that adversely affects the value of the home. The appraiser will also itemize things that increase the value such as a new roof, added insulation, and certain upgrades like central air.
Your home’s appraisal value is based on many factors.
While the location attributes of your home is out of your control, it can greatly affect value. These attributes can change over time since you first bought the home. Crime rates, schools, walkability, owner/renter ratio, and commuting distance are all factored into your home’s value.
Newer homes made with modern materials are likely to appraise higher than older homes that haven’t been updated or have hazardous materials such as asbestos. Structure updates will also increase value such as a new roof, siding, and electrical.
It’s not necessarily about how the age of a house but how it’s maintained. Older homes that are well maintained in good locations can appraise just as high as newer construction homes.
Looks do matter. How your home presents itself at first sight from the street can affect the appraised value. An appraiser may also look closely at the landscaping and take note of any unruly vegetation or potential hazards such as old or decayed trees to close to the house.
Though overall square footage is a big factor in appraising the value of a home, it’s the actual usable and livable space such as the number of bedrooms that matters most in an appraisal. While a finished basement is nice and useful, adding on another bedroom or bathroom will add more value.
An appraiser finds a baseline for appraisal value by comparing your home to other similar homes recently sold in your area. The sale price of other homes in your neighborhood with the same number of bedrooms and bathrooms, square footage and updates can affect the value of your home.