Appraisal of a property is one of the most important things that mortgage refinancers ask you to do because how much loan will they provide to you or for how much the property in question will be sold to a particular buyer depends on it directly. To lenders, it doesn’t matter what’s the value of your property in your eyes – it’s the value provided by an appraiser that matters.
But getting your home appraised for the right value is becoming an uphill battle today. Since last year there has been a steady increase in the mistakes made by appraisers during the appraisal process.
For getting your property appraised for the right value and for making your expectations realistic it’s important to understand the appraisal process yourself. In this article we’ll talk about some common things which decrease the value of a property.
Location: The first and most common reason is location. Distance to the common facilities from your property (i.e. shopping malls, hospitals, schools, parks, highways etc.) is a thing which affects the value. Plus, there are also some other locality related things which play a major role in the valuation process. For example, properties which exist in a high-crime area are usually appraised for a lower price in comparison to the similar properties of a low-crime area.
Comparables: Comparables, also known as ‘Comps’ in the language of appraisers are second major factor which may drastically increase or decrease the value of your property. Comparables are the properties in your locality which are similar to your property and have been sold recently. Appraisers take a close look at those properties and examine them by finding information from MLS listings, tax records and county. They also perform a field inspection of the comp for finding out whether it matches up with your property or not. After ensuring that the property being used as a comp is similar to yours from every possible method, they evaluate the value of your property.
Upgrades: The upgrades which you’ve done in your property will also impact its value directly. These upgrades are compared to the upgrades of comparable properties. Each upgrade done in your property that isn’t available in the comparable property will increase the value of your property. On the other hand, each upgrade that’s available in the comp but not in your property will decrease the value of your property. Wooden flooring, updated baths and kitchens, energy-saving technologies and every other upgrade can increase the value of your property.
Condition: The condition of your property also impacts its value. Appraisers look at your property from the eyes of a potential buyer. Peeling paints, leaks, clutter and cracked glasses all will account for a decrease in the property’s value. So it’s a good choice to keep your property as maintained as possible when it’s time for an appraisal.
Neighbourhood: The neighbourhood of your property also accounts when it comes to the valuation. Properties similar to yours in the same locality but with a better kept neighbourhood may get appraised at a higher value in comparison to your property. The quality of schools in your neighbourhood and how you help in maintaining the quality of neighbourhood helps in getting a higher value.
By Alyssa Benson