Unbiased Financial Information Provided by Financial Finesse
Do you know how much your home is worth? There are plenty of reasons why you might want to find out -- to set an asking price if you're going to sell, to calculate how much equity you have, to prepare a good estate plan, or just to satisfy your curiosity. An appraisal - formal or informal - will tell you what you want to know.
The Professional Appraisal
Real estate appraisers take two main approaches to figuring out what your home is worth:
Comparable Value: The appraiser compares your property with similar properties that have been sold in your neighborhood, ideally within the last year. That's an especially accurate barometer if you live in a neighborhood or subdivision where the homes and lots resemble each other.
Replacement Cost: Your appraiser will consider the cost to buy a similar lot and the average price of building materials needed to rebuild a home that would match yours, adding to that the cost to replace special features in your home, such as French doors, a Jacuzzi tub, or plush carpeting. After calculating these costs the appraiser will make a deduction based on the age of the home.
Appraisers typically charge between $250 and $500 for a full appraisal. To find a licensed appraiser in your area, use the "Find an Appraisal Expert" search form on the American Society of Appraisers Web site.
The Do-It-Yourself Appraisal
If you're not required by a lender to submit a formal, professional appraisal, but simply want a ballpark figure of your home's value for some other reason, you have the option of doing the "appraisal" yourself.
Sites such as www.zillow.com offer free home valuations. Use it as a starting point to get a broad estimate of what your home and surrounding homes are worth.
You can also consult a real estate agent that you know for their professional opinion of what your property is worth. If you decide to do this, be upfront and honest about whether you are seriously considering selling the property or are just asking a favor. Even if you're not seriously considering selling, you may find an agent willing to visit your home and estimate its value as part of his or her "public relations" or business development efforts.
A Home Inspection Can Reveal How to Get a Higher Appraisal
If you want to get the highest appraisal possible, you should have your home in excellent condition. To find out what improvements need to be made, you might want to invest the $250 to $500 that a home inspection costs. An inspector will point out all the defects that might reduce the value of your home, giving you the opportunity to fix those things that will enhance your property the most.
According to Milt Tanzer, Realtor and author of How to Buy or Sell Your Home Without a Broker, some of the red flags a home inspector might spot include:
- Chipped steps or damaged fences
- Leaks or loose shingles on your roof
- Chipped paint on the outside of your home
- Evidence of water on your basement floor
- Partially clogged drains in your house's plumbing system
- Inefficient or frayed electrical wiring
It's easy to find a licensed home inspector in your area using the "Find an Inspector" search form provided on the American Society of Home Inspectors Web site.
This article, 20 things that can alter the value of your home, provides some good recommendations for increasing the value of your home. The article also delves into those "upgrades" that may actually be a liability in disguise.
And that, of course, could translate directly into a higher home appraisal.