Real estate appraisals help set a property's market value, but several factors can lead to an inaccurate appraisal, especially if you try to do it yourself. The wrong valuation can result in overpaying or selling for less than the property is worth.
Here are a few of the most common reasons for an inaccurate appraisal.
You Didn't Account for Recent Home Improvements
If you've made any improvements to your home since you last had it appraised, be sure to factor that into the value. Even small updates like painting or replacing old flooring can add hundreds or even thousands of dollars to your home's value.
So when appraising your home, account for all recent improvements, both big and small. This will give you a more accurate estimate of your property's value. Whether you've installed a new roof or simply painted the walls, these updates should be factored into your appraisal.
Other improvements, such as adding an outdoor deck or finishing the basement, can also add value to your home, so be sure to include those as well.
While home improvements are meant to add value to your property, not all upgrades will have the same impact on market value. Some home improvement projects, like a new roof or HVAC system, may be necessary to maintain the property in its current condition. Others, like a pool or deck, may add more curb appeal but may not offer a significant return on investment come sale time.
Most homeowners don't understand the difference between necessary repairs and those that will add value, which can lead to over-improving their home and not seeing a corresponding increase in market value.
You Used the Wrong Comparables
Comparables, or "comps," are similar properties in your area that have recently sold. These sales prices are used to help determine the market value of your home. When appraising your property, you should look for homes similar in size, age, and condition to yours. Don't use dissimilar homes in any of these categories, as they won't accurately represent your home's value.
For example, if you're appraising a three-bedroom home built in the 1970s, you wouldn't want to use comps for a four-bedroom home built in the 1990s. The two properties aren't comparable, so the sale price of the older home wouldn't accurately reflect the newer home's true value.
If you're not sure which properties to use as comps, a state-certified real estate appraisal can help you select the most appropriate ones. They already understand the current market conditions in your area and will be able to find the best comps for your property.
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