How Does a House Appraisal Work: Value, Tips, & Factors


Are you thinking of doing a house valuation and want to prepare yourself in the best way? You do not need to do anything special in the house itself, but feel free to collect relevant information.

The realtor prepares your valuation of the house in one place – so that you will get as accurate a result as possible.

So, how does a house appraisal work?

The broker comes for a home visit. You go through the home together and you as the owner tell us about any renovations that have been made to the home. When you have finished the review, you sit down and discuss the conditions around your home and also your housing situation.

The realtor will ask if you are planning to sell the home, looking for a new home, want to refinance a loan or if you are just curious about the value.

  • The valuation normally takes about 30-60 minutes
  • The home and your housing situation are discussed
  • The broker can provide suggestions for value-adding renovations / improvements
  • If you plan to sell the home, you will receive a quote from the realtor

What the market value is based on – how it is assessed

The value of the home is based on the current market situation and previous sales of similar homes in the area.

The realtor compares your home with other homes that have been sold recently. You then take into account the location, size, condition and so on.

You will then receive the assessed market value presented to you.

Since it is never possible to say exactly how much a home will be sold for, you have to put a span on the valuation.

This means that brokers make an approximate assessment of what you could get in the final price when selling the home in the prevailing market.

Example
The market value of the home is $200.000 + – $10.000.

  • Based on current market situation
  • The broker compares the home with other similar homes that have recently been sold in the area
  • The valuation is presented with a range

Revaluation of housing – Step by Step Guide:

Most often, you revalue your home to improve the terms of your mortgage. Many people re-evaluate their home after a renovation or if prices in the housing market have risen.

If the home has risen in value, the loan-to-value ratio will be relatively lower, which may reduce the amortization.

It may also be possible to obtain a lower interest cost on the mortgage or extend the mortgage to, for example, finance a renovation.

1. Hire a broker for revaluation

Getting help from a realtor is the most common way to make a revaluation of a home.

Brokers are experts in revaluations of homes and I therefore recommend that you hire a broker who will help you value the home.

2. Value the home

You can make two different types of valuations: a general valuation and a more comprehensive one.

A general valuation is suitable for you who want a statement about what your home is estimated to be worth, without a written certificate.

A general valuation does not count as a revaluation and can therefore not be used to change the terms of your mortgage.

3. Replace the mortgage after the revaluation

When the real estate agent has completed the revaluation, you will receive a certificate of the new value of the home. You can then use the certificate to try to refinance your mortgage.

How can you influence the appraisal?

Now that you know what a apprasial means, there are some things you can do before you hire a broker to influence the value to the higher.

  • Make sure the home is clean, then the house gives a more positive impression.
  • Clean in garages, storage rooms, closets and cabinets. Smaller things give an airy home.
  • If something is broken or worn, it may be worth doing a little renovation.
  • Freshen up the outside by painting the facade and washing the ceiling.
  • Do a little home styling yourself where you increase the cosiness factor with a lot of textiles.

Statistical appraisals online

Today you can make valuations online on various different websites. These valuations are based only on statistics from previous sales in the area.

They take no or poor account of the condition, location and layout of the home.

Statistical values are very unreliable and are often several hundreds of dollars away from reality.

I therefore do NOT recommend relying on a statistical valuation.

Many factors affect the valuation of your house

Factors that affect the valuation of your house are of course such as location, size, floor plan and what type of house it is.

These things determine which buyer groups may be interested, which affects the valuation.

When it comes to the house itself, the broker looks more at things such as operating costs, the condition of the roof and facade, drainage and heating systems – things that can be costly to have to fix and an imaginary buyer is not so eager to have to deal with.

A more cosmetic change a buyer usually wants to make himself.

Of course, it is important to go through the whole house and fix everything that does not work or looks broken or too worn.

It is also a good idea to review the driveway and garden a little extra.

The first impression is important, and the realtor here tries to look at your house with the eyes of a potential buyer. A positive overall impression is a good start.

Conclusion

Tips for your house apprasial

An experienced broker looks at the basic features of your house and can look past small flaws. Therefore, you do not need to put in jobs on styling and cleaning before the visit. Some things are still good to prepare:

  • Think about your house’s unique characteristics. What are the advantages / disadvantages of the house?
  • Produce documentation and compilations of renovations you have made since you moved in.
  • Feel free to have a compilation of costs associated with your house ready: heating, garbage collection, assessment value, any ground rent and the like.

Sources

https://ideas.repec.org/a/fip/fedpbr/y2010iq1p11-22.html

https://journals.vgtu.lt/index.php/IJSPM/article/view/11544

https://content.iospress.com/articles/journal-of-economic-and-social-measurement/jem00317

https://ieeexplore.ieee.org/abstract/document/8253468

https://www.tandfonline.com/doi/abs/10.1080/10835547.1993.12090704

https://academic.oup.com/heapol/article/14/2/182/710591?login=true

https://www.sciencedirect.com/science/article/abs/pii/S0278416505000127

https://www.tandfonline.com/doi/abs/10.3152/147154602781766717

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1084984

Kevin

This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policies.

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