We always enjoy the well written and very informative articles Scott Murphy, one of Metro- Atlanta's most creditable appraisers, contributes to the Georgia Real Estate Commission Newsletter on a monthly basis.
Here is one that is worth sharing and contains useful and realistic information. Thank you Scott, we look forward to the next one.
Use These Four Tips To Make Your Home Appraise For More
By: D. Scott Murphy, SRA
Use these four tips to make your home appraise for more and increase its appeal to potential buyers. Many sellers are disappointed when the appraisal for their home comes in much lower than expected. While it’s easy to blame the appraiser, it’s more effective to learn about the complicated appraisal process and the areas where you truly have influence.
Quite often homeowners ask me what their house is worth as soon as I complete my inspection of the property. Unfortunately, a real estate appraisal is not that simple. While appraising is a science and has a quantitative component, it takes more than a physical inspection of the subject property.
I tend to say “this is the easy part of the process…”, now that we have confirmed the physical condition of the subject, made note of upgrades and overall quality, we need to compile that data, research comparables and analyze the results. This is where the art of appraising happens. The ability to truly immerse ourselves in the market and interpret the actions of buyers and seller; the ability to filter the comparables and use the most appropriate sales and extract the proper adjustments from the market to arrive at the most accurate estimate of market value.
There are however, a number of simple suggestions I have for homeowners who want to maximize the value of their home.
Here are four tips that will help homeowners to get a better understanding of the appraisal process, raise the appraisal value of their home, and learn more about getting a home ready to impress potential buyers.
1) Focus on the curb appeal
Whether a buyer is viewing potential homes online or driving by them, a good “curb appeal” will go a long way to getting more buyers in your home.
Curb appeal is a term that generally describes how your house looks from the street. I suggest that sellers start by actually standing in front of their house to look for potential issues. While this seems obvious, many people don’t do it.
If there is a shutter, which is kind of hanging off of your house, fix it! Curb appeal is more than just landscaping; it’s everything from the color of your house to furniture on your porch. It might be that your landscaping is over grown and needs to be removed or cut way back. This is very common in homes 15+ years old.
While improving curb appeal might include some landscaping, do not to go overboard. Don’t spend $10,000, $20,000 or more on landscaping. This generally does not yield a high return as buyers typically do not want to maintain a mini Callaway Gardens in their front or back yard.
2) Don’t give buyers an upgrade allowance
One school of thought is for sellers to give the buyer an allowance rather than make improvements like removing wallpaper, changing out carpet, and painting walls. Their rationale is that the new buyers would rather pick out their own colors and styles.
In my opinion, it’s not a good idea to give an allowance to the buyer. You won’t get as big of a return. You want those buyers to come into your house and be wowed.
While it might be nice to give them a choice of colors, the renovation effort involved often outweighs the benefit. Just pick out a neutral color and they’re going to be happy with it. Buyers right now don’t want to do a lot of work when they move in and many lenders will not allow them to do escrows. For you to do things in advance like change the carpets and change the paint—it’s going to make a real difference when the buyer goes to get their mortgage.
3) Consider the real return on high-cost improvements
High-cost home improvements can be a real gamble. Like anything meant to add worth to your home, it only has value if it is consistent with what other buyers would expect in that area.
Some higher cost additions that you can do to raise the value include adding things like new kitchen appliances and kitchen counter tops. Again, those are going to have a good return as long as you are consistent with the market.
We live in a multi-cultural society where people relocated to Georgia from all over the world.
Once settled homeowners want to make their house feel like home. We all want to feel comfortable in our own home but I caution home owners to consider the impact their choices will have on the resale value of their home. They sell granite in a million different colors. It’s going to cost you $5,000 to put a new counter top in your kitchen whether it’s sea foam green or a more traditional earth tone that’s appealing to a typical buyer. You want to appeal to the broadest market that you can.
The best way to get in touch with what is appealing in your market before you spend any money is to get advice from an experienced real estate agent or tour other homes for sale in the area.
So what are some high-cost improvements that aren’t ultimately a good investment? Since we are talking about homes on Georgia, pools would have to be very high on the list. However, before pool installers start sending me nasty letters, the value of a pool can vary significantly based on the value and location of the house. If you installed a $40,000 pool in a $100,000 home in a swim tennis neighborhood, most likely the return on investment would be next to nothing but if it were a million dollar home on an estate lot the rate would be much higher – possibly 100%.
What I tell most people considering a pool it to look at their competing market, see how many homes have pools and if a pool is impacting the marketability of those homes. Also consider how long you plan to stay in the home.
The longer you stay the greater your percentage of return will be.
Green renovations are another high-cost home improvement that doesn’t necessarily translate into higher home values. I hate to say this but it’s true. While buyers are looking for energy efficient homes, the market is slow to embrace green technology. Again, consider how long you plan to stay in this home. The longer you do the more you will return on your investment.
4) Kitchen and bathrooms
I left the most commonly suggested improvement for last. Many will tell you the best money you can spend on your home is to improve the kitchen and bathrooms. While, in general, this statement is true, sellers should look at the overall condition of their home and make the kitchen and bathroom improvements in concert with updating the entire house. All too often I see a home with just an updated kitchen; new granite counters and stainless steel appliances. The bathrooms and rest of the house is original.
While the kitchen may be the best place to start, it’s usually the most expensive, have a comprehensive plan. Door hardware, lighting fixtures, carpet and paint are very important and generally lesser expensive improvements.
Hopefully these items will help agents and sellers better prepare their properties for sale. I welcome your feedback and would love suggestions of topics you would like to hear more about. Emails can be sent to [email protected]
To find out more about the current Real Estate Market and the home prices here, call Ursula & Associates of Keller Williams Realty Partners at 678-569-4044 or search for homes for sale.
Curious as to what your home might be worth?
Find out below: