A property appraisal is conducted to determine a home’s current value. This is done when homeowners are looking to sell their home or refinance. Value is dependent upon many different factors including location, amenities, home renovations, etc. The appraised home will also be compared against other similar homes that have recently sold in the neighborhood.
Why is an appraisal necessary?
Lenders are required to receive an appraisal of the borrower’s current property to determine how much can be lent to the borrower. Appraisals ensure the property is worth the monetary amount of the loan. If a lender were to lend out a loan higher than the appraised value of a home, they would not receive all their money back.
What if the appraisal comes in low?
If your appraisal comes in low there are a few things you can do.
Order a second appraisal
Appraisers are trained professionals when it comes to placing a value on your home. However, if you are convinced your home is worth more, you can order a second appraisal. Appealing the appraisal is a similar option; where multiple parties look for information that will place the home at a higher value.
Talk to the seller
Depending on whether the seller has other offers, they may be willing to negotiate. Inquire about reducing the selling price - you never know what they may say!
Figure out if your prospective property is worth the risk
If you have run out of options, it may be best to stop the process. This doesn’t mean you can’t buy a home in the future! The market may not be in your favor, but waiting to sell will be to your benefit when the market is back on your side.
How can home value be increased?
There are many things that can increase your home value.
Make small repairs
Small home improvements pay off and add up over time. This can be as small as repairing holes in the walls and putting on a fresh coat of paint. Every little bit helps!
Add curb appeal
Curb appeal can make a huge difference in the value of your home. Look at other homes, and see what you like about them. If it’s a fresh coat of paint or the new landscaping a neighbor has just completed, consider making these changes on your own home.
If you’re feeling up to a home renovation, consider remodeling the kitchen. The kitchen is the room with the greatest return, according to HGTV.If you found this information to be helpful and you would like to move forward with refinancing or purchasing a new home, contact us.