How will updates to your home impact an appraisal?

It’s important for you as a seller to understand that not everything that you’ve put into your home, no matter how extensive or exquisite will be given substantial value in the eyes of an appraiser. It’s critical to remember that an appraiser will never give value equivalent to the cost of each component in a home.

You may have spent $20 per square foot on wood floors, but an appraiser may not give any more in value to these than a home that has $8 per square foot wood floors or even wood tile.

The fancy marble counter tops might not add any extra value when comparing this to a home that has quartz or even granite counters. Pools are especially subjective, and just because a you spent $150,000 on a lagoon style pool with grotto, bar, water slide, etc., does not mean an appraiser will see it that way as far as how much the pool is worth appraisal-wise. Certain things will not add extra value at all, such as a newer roof or home air conditioner and ventilation system, but they will help the home sell faster and for a stronger price. Pool screens, epoxy flooring or cabinets in the garage, while pricey to install, will not inherently increase the value of a home on an appraisal.

How will other home sales factor in?

Real estate: It’s complicated, and when it comes down to which comparable properties to use on the appraisal report, it can be anyone’s best guess. Fingers crossed, but this is where it can get subjective.

It is important to remember that an appraisal is defined as an art and not a  science. Therefore, the comparable properties that one appraiser uses might not be the same as another. “Reality, I’ve seen so many variances, don’t expect any appraiser to necessarily include properties in an adjoining neighborhood or area that sold for higher prices to justify a seller’s contract sale price if there are lower-priced comparables that are suitable in the subject property’s immediate neighborhood.”

Cash sales might not be used when the subject property is being financed. An appraiser cannot give huge adjustments to make the subject like the comparables due to lending guidelines that dictate limits on the maximum percentage of adjustments that can be made.

In other words, don’t expect an appraiser to take a 3,000-square-foot home and adjust it to the subject property that is 2,400 square feet. Appraisers are going to try to use the most recent comparable sales available, and those most like the subject in size.

This might be disappointing for you as a seller that is banking on that record-breaking sale from six months ago to be incorporated when there have been several recent sales that closed for less. If the home is in a neighborhood where there are higher new construction sales, the appraiser will most likely stick to resales that could have lower prices!

TOMMOROW? How does an appraised value compare to market value, and what if the appraisal comes in much less than the contract sales price.

Author: danswingblog

Dan has celebrated over 19 years as a full-time Realtor. Successfully listed and sold Luxury homes, diversified real estate portfolios, Advises and assists clients with challenging liquidations and purchases. Not uncommon to be working with foreign nationals, buyers that leverage the Sterling, Euro, and similar currency. Dan welcomes the Global community, with friends in many Nations. He brings a reputation for Integrity, Expertise, and Focus. Our customers deserve the best. Currently provides Residential and Commercial B.P.O.'s, Broker Price Opinions, B.O.V's, Broker Opinion of Value to many lenders. Manage and Sells R.E.O., Real Estate Owned properties, distressed properties! Evaluate and negotiate solutions for sellers and lenders. Developed, operated and sold a Florida "AWARD WINNING" Ad Agency! 2010 & 11 Commercial Agent of the year. RE/MAX Paramount Properties. Relocated to Tampa in 2012, enjoyed retirement for 6 months. Saw unethical practices by some Realtors and choose to reverberate our profession in the Tampa area. In four years built his business to as many as four (4) transactions monthly. Mortgage brokers were calling Dan a Superstar in Real Estate. Dan and his wife relocated to North East Florida, to the community of Nocatee. Currently focusing on 55 and older communities and Luxury Real Estate. Successfully closed on many extremely challenging foreclosures, and Short Sale. Coached and participated in Commercial and Multi-Income Family REO's in the past six years. Elected to the Auburndale City Commission in 1986-88. Created and served as 1st Redevelopment Chair in 1988 & 89 personally put in place all the elements for the Auburndale CRA. 1990 City Commission refused to give a full vote of confidence. After a 5 year journey to personally raise funding, extensive research and study for the CRA district perimeters, and stunned with the Commissions doubt. Positioned himself to run for office again, was re-elected to Auburndale Commission, to serve 1991-93 to full fill the CRA master plan! Active with the Central Florida Development Council from conception in 1985 and sat on the board periodically for the past 25 years representing municipalities and private investors. The positions Dan held from 1986 through 1993 enabled him to have a complete workable understanding of the State of Florida Comprehensive Plan for Future Land Use, and the benefits of intergovernmental agreements, utility franchise expansions, and public/private partnerships! Specialties: Assets recovery & receivership, Real Estate Portfolio's, REO & Short Sale of Residential and Commercial negotiations, marketing consultant, public relations, and Broker Price Opinions for residential and commercial lenders.

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