The importance of a current home appraisal doesn’t go away when seeking out a private mortgage lender. Even though lenders and borrowers can get a decent idea on what the general amount a home will be worth by using some of the various free market value estimation tools on the market, a professional home appraisal will help narrow down the range of value that a home is worth. That being said, if you are looking to sell or refinance your home, it’s generally a good idea to research home appraisal tips before having the professional appraiser show up to put a value on your home.
Why Do You Need to Use a Professional Home Appraisal Service?
Many private lenders will start negotiating with potential borrowers based on the fair market value of a home. Before closing on a loan; however, most will require the use of a professional home appraisal service to narrow down the ranges of value for the home. Many times, lenders will be relying on the house coming in at a value equal to or greater than the amount being financed in order to qualify for the loan or avoid paying private mortgage insurance. If the appraisal comes in too low, it may increase the lending institution’s risk to the point of either increasing the interest rate on the loan or could make it infeasible to proceed with the deal.
As a result, it becomes critical to properly prepare a property for an appraisal if you are currently residing in the house. If you are not or don’t have access to the house, then the number of factors under the consumer’s control when preparing for an appraisal are significantly reduced.
Home Appraisal Tips
The following are a number of tips that consumers can use when preparing to have a house appraised prior to obtaining a private mortgage loan on a property that you already own or reside in.
#1 – Take time to tidy up the home and yard.
Make sure you take some time to generally clean up the house and yard prior to the appraiser showing up to the home. This doesn’t include deep cleaning under the refrigerator; however, taking time to tidy up the yard by trimming back bushes, mowing the lawn, and raking leaves can make a good first impression on the appraiser when he or she initially drives up to the home. Next, wiping down the walls and if required applying a fresh coat of paint where it looks worn can also help set the stage for a successful home appraisal.
#2 – Curb appeal matters.
Curb appeal does matter when helping to set the first impression on the appraiser. If the owner hasn’t taken the time to cut back weeds, trimming hedges, etc, then he or she may also neglect the interior of the house. After the mortgage crash in the United States in the late 2000s, the condition of homes plays a critical role in the minds of professional home appraisers. Just spending a few hours on yard can set a home apart from others in the neighborhood. This is especially important if there have been home foreclosures in the same sub-division which were not of the best condition.
#3 – Do your homework.
Have a list of all improvements or updates made to the home since you purchased it originally. Believe it or not, professional house appraisers are not omnipotent. It may not be obvious to them that you have remodeled the kitchen, added livable square footage, or replaced the roof over the last several years. Each of these or other upgrades to a home can add value to the appraisal. Most professional appraisers will want a list of all upgrades made in the past 15 years to a home. One should also point out minor changes such as changing out sinks, or major painting / sealing work accomplished in the recent past as these items can make a difference in the overall assessment of the home.
#4 – Ensure you have a listing of comparable property sales on-hand (or comps).
This is the job of the professional appraiser; however, he or she may not be aware of houses that have sold without the help of a Realtor in a “For-Sale-By-Owner” sale. Many times, these sales are not posted on the Multiple Listing Service used by appraisers. If there hasn’t been a lot of home sale turnover in your neighborhood, records of these sales can significantly impact the amount of money that an appraiser will say your home is worth.
#5 – Address any / all peeling paint.
For homes that are built before 1978, government-backed loans such as VA and FHA will require the peeling paint to be removed. This is more important than removing crayon or marker drawings from children on the walls of a home unless they have fully ruined the wall. You will not likely see a dollar-for-dollar return on the painting investment; however, it will keep your home on the higher-end of the assessment. Other expenditures generally worth taking a look at upgrading prior to an appraisal include the carpet, lighting, and plumbing fixtures. A lot depends on how good you have been at fixing or upgrading these items as they have broken, peeled, or gotten soiled while living in the home.
#6 – The location of the home matters a lot.
Location of the home still plays a significant role in the value of the property. If the neighborhood has seen significant changes to the positive, it’s worth letting the appraiser know. For example, if the neighborhood has been designated as a landmark or historic district, or if a new playground has been installed nearby it will be worth mentioning to the appraiser. All of these items can result in an increase in the overall value of the home.
#7 – Remember the $500 rule.
Most professional home appraisers will value a house or property in $500 dollar increments. If your home requires a repair that costs more than $500, this will count against the overall value of the home or property. These repairs can be cumulative in nature, so if you home requires 10 x $200 repairs, that could reduce the value of the property by $2,000.
#8 – Effective age of a property.
Appraisers can assign an “effective age” to a home after taking a look at the number of updates and overall condition of the home. If there are a number of cracked windows, tiles falling off in the shower areas, torn vinyl, and damage from pets, then the overall condition rating of a home can suffer. This will result in the appraiser coming in on the low side of the oval valuation of the home when comparing to equivalent homes in the neighborhood.
#9 – Keep your pets away from the appraiser.
Even if your appraiser shows up and appears to be very pet friendly, they likely do not want to spend time around the family dog. If the appraiser doesn’t feel comfortable, or safe around your dog, then he or she will likely not give you the benefit of the doubt when assessing the property.
#10 – Pay attention to the climate within the home.
Similarly, if it is freezing outside, then make sure you have the heat on inside of the home (and set to a comfortable temperature). Conversely, if it is hot outside, run the A/C to the point that it is pleasant or downright chilly inside. These small things will 1 – let the appraiser do their job in an efficient manner, and 2 – Makes it easy for them to say that the heating or A/C work as designed which will help the overall appraisal value of the home.
#11 – Save your questions for the appraiser until the end of the assessment.
Many times, appraisers will want to generally be left alone while conducting appraisals of homes. It’s OK to ask questions; however, do so at the end of the visit. The last thing that you want to do is interrupt the appraiser while he or she is in the middle of assessing the amenities and conditions of a home.
Is it Useful to Research the Fair Market Value of a Home?
It has become relatively straight forward for consumers to conduct their own research for the range in values that a home is worth in today’s market. There are a number of freely available tools available online to include those provided by Yahoo Homes, Chase Home Evaluation Tool, and Zillow, which provide accurate assessments of the fair market value of a home. These tools also provide a means for home owners to research the value of the neighboring homes to the one of interest.
Determining Fair Market Value using Zillow.com
Zillow.com is an online, real estate database that was established in 2005 by the founders of Expedia. Zillow maintains information on more than 100 million homes in the United States and is free to use. In addition to providing insight on the fair market value of a property, Zillow is also able to display the value of a home over time (one to 10 years), value of the neighboring properties in a sub-division, and where available: the number of bedrooms, bathrooms, and overall square footage of a property.
Step 1 – Open the web browser on your laptop or computer.
Step 2 – Enter the Zillow.com, http://www.zillow.com/, website into the browser’s address tool bar and click the “Go” or equivalent button on the browser.
Step 3 – Input the home or property address into the primary search text field displayed on the main page of the Zillow home page. Then, select the “Search” menu button.
Step 4 – Select the property address located on the next screen displayed by the website. This action will expand the property listing after you view the Zillow property estimate of the value of the home.
Step 5 – Select surrounding properties to check out the Zillow estimate for their fair market value. Zillow will display the nominal range of costs for monthly mortgage payments as well as rental values for the home.
Assessing Fair Market Value using the Chase Home Value Estimator
The Chase Mortgage Home Value Estimator performs similarly to the Zillow and Yahoo Homes Tools. The Chase Mortgage application makes use of both publicly available home data as well as the immense database of home loans the company owns or has dealt with over the years while taking into account current market trends and valuations.
Step 1 – Open your laptop or desktop computer’s web browser.
Step 2 – Input the Chase Mortgage Home Value Estimator URL in the web address tool bar in the web browser, https://www.chase.com/mortgage/mortgage-resources/home-value-estimator. Then, click the “Go” or equivalent button on the browser tool bar.
Step 3 – Input the street address of the home of interest in the blank text field on the website. This will include the street address, city, state, and zip code. Then, click the “Get Value” button located next to the text field on the website.
Step 4 – The fair market value of the home will be displayed on the subsequently displayed web page along with the value of the surrounding properties in the local area.
Step 5 – Select the “Local Trends” menu choice to view a chart that indicates the market trends in the same zip code over the past year.
Step 6 – Choose a nearby property to the house of interest and then click the “Search on This Property” text link. This will display the fair market value for nearby houses in the same area as the house being researched.
Determining Fair Market Value using Yahoo Homes
The Yahoo Homes service makes use of both publicly available and proprietary data to provide a fair market value assessment of houses in the United States.
Step 1 – Open your computer or smart phone’s web browser.
Step 2 – Click on the Yahoo Homes Home Values application URL to launch the program in the web browser, http://homes.yahoo.com/home-worth.
Step 3 – Input the street address of the house in the “Address” section or text field of the tool.
Step 4 – Click in the text field for the city/state and enter the city, state, and zip code for the home.
Step 5 – Click the “Search” menu button located on the Yahoo Homes web page.
Step 6 – View the fair market value for the house being researched on the subsequently displayed web page.
Step 7 – Select the “5 yr” home value change menu option to see the fair market value of the house or property displayed over a five year time frame. You will also be able to see appraisal results from Eppraisal.com and Zillow.com on this page.
Step 8 – Choose the “Nearby Similar Homes for Sale” menu option to view other houses for sale in the local area of the house being researched.