Increasing Your Home Appraisal Value
Is increasing the value of the appraisal for your home possible? Well… it can be. Though the appraisal process is a ‘hand-off’ process and you should not try to influence the appraiser to add value to your home, (If you do they will file a complaint against you!). Then how could you increase the appraisal value of your home? and keep it legal?
In this review we will skip the tips concerning paint and gardening tips to increase the appraiseal home value, those are fine, but will contribute only a small fraction to the appraisal report. Here you will see tips that can increase the appraisal value by thousands of dollars.
Appraisal Information Basics
It is important to know how appraisal evaluation is done, and how the appraiser is doing is job. You must be aware of what the appraiser is searching for, and how they determine the final figure based on what they have found.
The appraisers need to produce a figure which will be as close to the market value of the property. So if the lenders who are the new owners of the property will need to sell it, (if the loan is not paid) they have a figure they can estimate what they will be getting for the property by a prospect buyer. If the lenders assume they will be getting $300,000 by the appraisal report, this is exactly the sum they will be willing to lend you, as this is the current market value for the home.
The Appraisers Need ‘Comps’
The appraiser collects all sorts of information, from all sort of sources. The most important piece of puzzle in the appraisal report is what appraisers call ‘comps’ those are the compared deals of similar homes they need to evaluate. Those Comps can not be just any compared deals but they have some clear rules which deals to compare to.
The idea of the appraisal comps is to find at least 3 real estate deals similar to the place they are evaluating. Now the word ‘similar’ is very important! The closed deals they compare need to be of similar by size, and by location. It is common that they need to search for 3 deals in the radios of 1 mile from your location. On top of that the compared deals need to be from recent times, preferably from the last six month.
So appraisers will seek, 3 similar closed deals, 1 mile away, which took place up to six month ago. When they find such deals they then assume that your property is worth somewhat the same as those closed deals.
Increasing Appraisal With New Information
You can legally increase the value of your home, if you bring new information to the appraiser, concerning deals he might have missed. If the appraiser has compared your home to 3 deals each at $250,000, and you find two more deals in your neighborhood, which closed at $280,000, your appraiser will have to take those into consideration! It might be that your home is worth MORE. It is legal to produce information for the appraiser, it is illegal to manipulate information to raise the value.
Increasing Appraisal Value With New Insights
Think that the appraiser found a deal where the closing cost was $50,000 lower than your market value property estimation, he might understand that your property market value is $50,000 LOWER than you think it is. But now because you live in the neighborhood, and talk to real estate agents, and have learned that the other deal was closed because the person was stressed financially, this has a great impact on the appraiser evaluation. The fact that the other property was sold under distress, can cause the other deal to be erased or at least eliminate the $50,000 difference for the comparable deal.
Increase The Appraisal Value By Changing The Appraiser
If you got an appraisal report, and found out that the market value for your home is ridiculously low, and want to improve the appraisal value of your home, than you can ask for another appraisal to be done. You should pay the appraiser fees again and get another appraiser to file his report.
If there is a major difference between the two reports, then the low appraisal can not be taken ‘as is’ and the lenders will need to send a third appraiser because one of the former two is out of scale, and it means there is a higher risk for the lender’s money.
Increasing Your Appraisal Market Value
As you can see the two main keys here are to know the market and understand the figures. For this you need to connect to local real estate agents, home brokers, insurance and mortgage brokers and real estate attorneys. Those are the people who know not only how much a comparable real estate was closed, but why, and what were the reasons for the low or high price that was closed.
You are legally allowed to share this information with the appraiser, if you think it can increase your appraisal value for your home.