In general, it is a good practice to know the approximate value of your home. You will need this information when you are planning to refinance your mortgage, sell the house, or switch homeowner’s insurance providers. Many factors go into deciding your home’s value though, and not all of them are under your control. The size of your lot and location of your property are paramount, along with the surrounding local market. You can put in work to improve your home’s value, but it is hard to estimate their contribution without looking at the big picture.
As a proud homeowner, your view of your home’s worth may be a bit skewed–after all, we tend to take our fond memories and emotional ties to the space into account when estimating its value whether we intend to or not. Additionally, upgrades you have made may redeem their full price, but often they do not. If you have got a large home, upgrading to hardwood floors or putting in a pool is a great way to increase its value; for smaller homes, you’ll want to consider something more along the lines of a kitchen renovation or bathroom remodel. It’s up to a professional appraiser to evaluate your home.
Appraisers are most often hired by the lender (a bank, in most cases) to visit the property and determine its market value. They do this by looking at many different things. They will research the other houses in your community to see their appraised values, and compare their features to yours. The square footage of your home, the size and shape of your lot, the number of bedrooms and bathrooms you have, along with additional amenities like decks or inground pools will be evaluated side by side with your neighbors’. The home’s history also plays a role in determining its value.
Since appraisers from the lender only come out after a potential buyer has put in their bid and gone under contract, you will not know the value until after you have put your house up for sale. If the appraisal comes in under the number you’ve asked for, it’s unlikely the bank will lend the full amount. The buyer instead needs to either produce the difference out-of-pocket, or you may need to lower your asking price.
To avoid this scenario as best as possible, you can hire your own appraiser before you put your house on the market. This will give you a better idea of how much to list your house for so that you can avoid an under-appraisal. However, keep in mind that the housing market right now is extremely hot. It is likely you will get many offers over your asking price, and some buyers come prepared to cover the costs of a lower appraisal in order to win your house.
Selling or refinancing your home can be a hassle. However, you can go into the process more confidently and with the right expectations if you have had a recent home appraisal done and understand the components that affect it.
West Coast Design Build Florida is a Sarasota-based contracting company specializing in kitchen, bathroom and lanai renovations.