Appraise this! How to improve your home inspection process
A home appraisal is considered standard operating procedure when selling your home, but did you know it’s also required for most refinancing programs? The loan-to-value ratio (LTV) is the amount a homeowner wishes to borrow compared to the appraised property value. This ratio can determine interest rates so having your home appraise at a high value is the optimal goal.
It can be intimidating and maybe even uncomfortable having a professional come and evaluate large and small details about your home, but the key word is professional: an appraiser is a trained and licensed individual hired to create an unbiased report on the value of a home. It provides you and the lender an impartial and accurate assessment in conjunction with the other factors of qualification such as credit score, debt ratio, etc.
What to Expect
When visiting a property, an appraiser will make notes and sketches, and take measurements and photographs of the property. They look at four main things to determine value:
• Size | The appraiser will need to measure the property; not just the house but lot size, garages, yards our outbuildings.
• Inside | In addition to the appearance of the home’s interior, they’ll look at condition of electrical, plumbing, windows and fixtures that all contribute to the overall value.
• Outside | Significant exterior features like roof, foundation, walls and siding are inspected for issues like leaks, cracks or mold, as well as general appearance.
• Improvements | Any upgrades made to the home since purchase are noted in the appraisal value. These may include central air conditioning, flooring, kitchen remodels, fencing or an enclosed patio.
Outside of the on-site evaluation, the appraiser will also check recent comparable sales in your area, schools and other assets in the neighborhood.
Doing Your Part
While you may not be able to change your square footage or do anything about that reputed haunted house in the ‘hood, but there are definitive steps to take that can only improve your home appraisal experience:
• Honest Appraisal | Pretend you’re the one professionally evaluating the property and be objective. Look hard at the problems that you don’t “see” anymore so you can address them ahead of time. Write everything down.
• Homework | Learn in advance what the comps are in your area – houses of similar size and condition that have recently sold. You can use online tools or ask a real estate professional to provide some insight on the potential value you can expect.
• Home Improvement | Be sure that all major systems –HVAC, plumbing, appliances – are in working order. Tackle some of the small DIY projects you’ve been putting off, like repainting a room, replacing smoke detectors or rehanging an old door.
• Clean Up | Get rid of the clutter and thoroughly clean the house – inside and out. Update simple visual aesthetics such as window treatments, cabinet pulls or light switch plates for not much money.
• Accentuate the Positive | Be sure to share any positives that the appraiser may not be aware of: upgrades and improvements you’ve made since purchasing like a new bathroom or roof, a recently added neighborhood park or other local amenities that have enhanced the area.
• Attitude | Be friendly and helpful while they perform their inspection. Provide any further information they may request.
It can feel personal to have someone put a value on your home, but it’s just one of the steps to achieving your goal. And remember, as you follow the path to refinancing – be it cash-out, FHA or for home improvement – our team at EnTrust Funding (ETF) will help you every step of the way.