How to Get a Good Read on What Your Home Will Appraise For

“How much will my home appraise for?” Absent a Magic 8-Ball that shakes out an answer to this question, the appraisal step of your home sale can feel like a total wild card. If a home doesn’t appraise for its sale price, you’ll either have to lower the price to the appraised value or ask the buyer to bring more money to the table to make up the difference.

Fortunately, there’s a lot of research you can do using online tools and the advice of local experts to get a firm understanding of your property’s value from the start and, in a sense, treat your pricing strategy like an appraisal itself.

That way, you’ll know if it’s wise to accept an appraiser’s assessment or if something looks off. We’ve outlined a few pro tips to help you create that initial home price estimate, learn how to perfect it through an analysis of the comps, and factor in the different variables that ultimately impact market value.

A person researching home value on a computer.
Source: (Sergey Zolkin/ Unsplash)

Use online price check tools and available data to get a ballpark estimate

Today’s array of online home price valuation tools make it easy to get a quick ballpark figure of your home’s worth. Simply input a few details about your home, push a button, and voila—it spits out an estimation of value like a gumball machine.

However, the algorithms driving these estimators can’t always measure every little detail that impacts your property’s worth. The results could be skewed by incomplete data or fail to account for factors like your home’s positioning on a busy street or its closed-off layout, ultimately providing you with an inflated estimate.

You could also get an estimate that’s too low if you’ve made recent upgrades or improvements that the tool didn’t loop into its calculations—and no seller wants to leave money on the table.

At this point in time, online price checkers alone won’t be an accurate enough indication of what your home will appraise for. In fact, HomeLight tested 7 valuation tools across the web and found the outputs among them for the same homes varied drastically.

Collectively, though, these tools can provide a decent average and are a good place to start your price research. We recommend HomeLight’s Home Value Estimator, which offers the advantage of sourcing information from multiple sources to create a real-time home value estimate based on current market trends.

But be aware that regardless of which tool you use, you’ll have to do some more work to verify the validity of the estimate you receive.

Get a comparative market analysis to improve your price estimate

A comparative market analysis (CMA), the process of evaluating nearby recently sold properties (aka “comps”) that are similar to your own house in size, age, and characteristics to determine property value, is the closest thing you can do to mimic the home appraisal process without being a professional licensed appraiser.

Agents universally use the method to set an asking price for their clients’ homes, while appraisers also use comps to inform their own opinion of value (combined with an on-site visit for a visual evaluation.)

You can do your own comps analysis by searching for “Recently Sold” properties on any of the top real estate listing websites to gather up a pool of comps and get a feel for the selling price of homes in your area. But your agent will provide a free CMA as part of their listing services and it will likely be more accurate than your DIY attempt.

Top-performing agents typically create hundreds of CMAs a year, have access to industry tools to speed up the process, and know how to make adjustments based on any renovations or remodeling work you’ve done. That brings us to the next point!

A hallway in a home that is being appraised.
Source: (Toa Heftiba/ Unsplash)

Factor in home improvements, upgrades, and floor plans

Home improvements and upgrades have to be factored into your home’s appraised value.

“Bathrooms and kitchens, if they are done well, will always help a house sell and achieve profitability,” says James Gargano, an appraiser who has been in the business for 35 years and owns Bomba Gargano Valuation, covering Chicagoland. But it’s not as simple as a dollar-for-dollar calculation.

According to HomeLight’s Top Agent Insights survey for Q1 2019, new wood floors and fresh paint on the home exterior have a 51% ROI, while bathroom and kitchen upgrades are closer to breaking even with a higher risk of losing money. Plus, some features of a home improve marketability but don’t necessarily add value. A backyard shed without a foundation, for example, doesn’t increase value, but an appraiser could subtract points for a shed in poor condition.

In addition, you’ll want to factor in your home’s layout. One study showed that homes with open floor plans appreciate 7.4% faster than their closed-off counterparts.

“All floor plans aren’t equal,” said Julie Kaczor, a top-selling agent in Naperville, Illinois.

“Same thing with bathrooms. Two and a half bathrooms could mean that there is only one bathroom upstairs for four bedrooms. The truth is the floor plan and the function of the home is a very big part of an appraisal, and there is an adjustment for that.”

For this reason it can be helpful for your agent to do a walkthrough of your home as part of their CMA. Before landing on an asking price, they’ll be able to see the house as an appraiser would. Help them out by keeping a detailed list of any upgrades that you have made so you can add these costs and their depreciation value to your CMA.

Order a pre-listing appraisal

A lender appraisal is a requirement during the closing process, but in some cases, sellers opt to get a pre-listing appraisal to get a better read for their home’s value. This isn’t typically necessary unless you’ve got a unique property or there’s a limited number of available comps.

Since this is another cost to you, you’ll want to be sure you hire an expert (with several years of experience appraising homes in your area) to make sure this step in the process is worth it and doesn’t mislead your pricing strategy.

Prepare the house for the lender’s appraisal

Once you’ve done your due diligence to figure out what your home is worth, and maybe even obtained a pre-listing appraisal, it’s time to get ready for the real deal. The appraisal will come in at the 11th hour of the home sale process (after you accept an offer and about seven days after the home inspection), so you need to know what to expect.

Other than the hard facts about your home like square footage, the number of bedrooms and bathrooms, location, and upgrades or remodels, the top feature that appraisers tend to look for is how your home presents.

“When I drive up I can tell right away if someone takes care of their house or not,” said Gargano. “It’s just that feeling that you get. After all, buying a house is an emotional activity.”

Having an impeccably-maintained home inside and outside can increase your home’s appraised value and that means deep cleaning, painting, pulling weeds, mowing the lawn, and fixing anything that’s broken could be the easiest way to pass the appraisal with flying colors.

Said Gargano: “You’ve got to have the house as clean as it has ever been. It could be something that’s really small like the handprints on a door, but that will have the buyer [and the appraiser] asking: ‘what are they not taking care of in this house that I can’t see?'”

Here are a few additional actions that you can take to prepare for the appraisal:

  • Make your home spotless and perfectly presentable:
    Your home needs to look move-in ready when the appraiser comes. Going above and beyond with your cleaning and fixing anything that’s broken is the first step, and you can also add staging touches, like fresh flowers, decorative pillows, and opening up windows for more natural light.
  • Ask your agent to be there
    Kaczor and Gargano both say that your agent can take your appraisal to the next level. As your home’s advocate, they can tell the appraiser about upgrades—such as a remodel that improved the flow of the floor plan, renovated bathrooms, or high-end appliances or fixtures added in the kitchen.

What happens if the appraisal comes in low?

If the number is lower than what you discovered in your research, don’t worry, because you can still get back on track. There are clear actions that you can take to remedy an appraisal that you aren’t satisfied with:

  • Look for errors in the home appraisal report.
    As a seller, you won’t automatically get a copy of the report but you can request one and the lender is required to get it to you within 30 days.
  • Challenge the appraisal with a Reconsideration of Value.
    Work with your Realtor to go through an appeals procedure, calling out issues such as poor analysis of comparable properties or square feet miscalculations.
  • Negotiate with the buyer without getting a new appraisal.
    You can lower your price to the appraised value or ask the buyer to make up the difference. Or, you can compromise by meeting in the middle.

Note that appraisal issues only account for about 3% of delayed or terminated settlements, according to HomeLight’s Top Agent Insights Survey. Moreover, as of Feb. 2019, appraisal values were only 0.5% below homeowner expectations nationwide, a difference of less than $2,000. Usually it’s possible to find a way forward.

What will my home appraise for? You may still be surprised

Even when you’ve done your research, you may still be surprised by what the appraiser comes back with. Remember that it’s only one professional’s opinion. With your own analysis and the guidance of a top local agent, you’ll be in a better position to advocate for what you know your house is worth.

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