What pops into your mind when you hear the term “home value?” More than likely, you think of what buyers would be willing to pay for your home. While that number—your property’s market value—is important, another one you should be concerned about is your home’s appraisal value.
If you’re not sure what appraisal value is, you’re in the right place. We’ll not only cover what it is and why it matters but also how to increase appraisal value and reap the benefits.
What appraised value is and why it matters
Market value, which we mentioned, is based more on general, subjective opinions of buyers about your home’s worth. Appraised value, on the other hand, is an objective assessment of its value by a licensed appraiser.
This assessment is what lenders use to approve or deny home loans, and to set the amount that can be mortgaged for a property. In simpler terms, it ensures that buyers aren’t trying to borrow more money than a home is worth. By only lending up to the amount of a home’s appraisal value, a lender protects itself from risk in case a home buyer defaults.
But this information isn’t just relevant for buyers and their lenders. Since a home’s appraisal value enforces a cap on offers, understanding what goes into it and how you can increase it will help you understand how you can maximize your profit from your home sale.
Assessing appraised value
Rather than looking at easy-to-change things such as your décor, appraisers focus mainly on semi-permanent and permanent factors that impact value. These include:
Comparable Listings (Comps): To come up with a value range for your home, appraisers look at the sale prices of homes similar to yours. Similarities they pay close attention to include the size, location, age, and style of comps.
Location: Where your home is located matters. Is it a safe area? Is it near good schools? How many parks and public transportation options are close by? The answers to these questions are difficult to change, but will impact your appraisal value.
Housing Trends: Besides looking at comparable listings and your home location, things like economic outlook, mortgage availability, and interest rates all come into play as well. For example, if it’s a buyer’s market with more homes than buyers, your appraisal value may be lower than it would be during a seller’s market.
Age: The age of your home is also an important consideration. Homes built within the last 10-20 years are less likely to have serious issues such as degraded building materials or damaged foundations. Therefore, they often appraise for higher values.
These factors impact your appraisal value the most, but they’re largely out of your control. Let’s dive into some of the other factors that appraisers look at that you are able to change to get a higher valuation.
How to increase home value for appraisals
Here are four things you can do to increase your home’s appraisal value.
1. Mind your curb appeal
Just as the outside of your home makes an instant impression—good or not-so-good—on buyers, it also makes an impression on appraisers. To improve your home’s curb appeal and your appraisal, you’ll want to clean up your landscaping, remove any dead trees that pose risks to your home’s structure (this will also help you with your inspection), and consider the best way to make outdoor living spaces shine.
2. Take care of necessary maintenance
The more work your home needs, the smaller your pool of interested buyers will likely be—and the lower your appraised value will be. So you’ll want to fix any issues with plumbing, electrical, HVAC, your roof, and any existing code violations.
The good news is that doing this doesn’t have to be expensive and time consuming. Ask your real estate agent about partnering with Curbio to get any necessary repairs taken care of quickly. The best part is that Curbio waits until closing to be paid, so you don’t have to worry about fronting the cash for any repairs big or small.
3. Modernize your home’s interior
Besides tackling essential repairs, you can also improve your appraisal by updating your home to create a more modern interior. For example, you could swap out carpet for luxury vinyl tile or hardwood, modernize your kitchen with granite or quartz countertops, and even remove walls to create an open-concept that modern buyers are looking for.
4. Increase living space
You can increase living space by constructing an addition to your home or, more easily, by finishing basement and attic spaces. While basement and attic spaces don’t always increase your legal square footage, it’s clear that they do add value, especially since modern buyers are increasingly interested in flex spaces that can be used as an office, a playroom, or an in-home gym.
Additions don’t always make sense. Luckily, your Realtor®, alongside Curbio, can determine whether or not additions or basement and attic projects will increase your home’s market and appraised values.
Getting the Highest Appraisal Value
Not everything an appraiser assesses is in your control. However, as you can see, there’s still plenty you can do to increase your home’s appraisal value as much as possible. This, in turn, can influence its market value, which will increase your profits.
Whether your listing needs interior or exterior repairs or improvements, Curbio and your Realtor® can work together to make the pre-listing home improvements that will have the most positive impact on your profits, without sacrificing your home selling timeline. Learn more about how Curbio works.