The overall goal when selling your home is to get the best price possible, so you can continue building your life elsewhere. And when you’re refinancing, you want to maximize the amount you can borrow by increasing your home’s value.
But a higher home value doesn’t come from your family’s added sentimental value or modern furniture, as those are yours to keep when you move.
Increasing the price of your house means adding tangible value to the property, which you can achieve by paying attention to the exterior and interior. With a home appraisal, you’ll understand what potential buyers would be willing to pay for your house.
In this guide, we’ll discuss:
- What a home appraisal is
- How a home appraisal works
- What efforts you can make to get the highest appraisal on your home
- What you should be aware of when trying to add value to your home
Let’s get started.
What Is a Home Appraisal?
A home appraisal is an assessment of the value of your home by a licensed appraiser. After a visit, the appraiser examines your physical property and conducts a comparative analysis using “comps,” a word for similar properties recently sold in your area.
The goal of an appraisal can be to determine the fair market price of your home (the best price of what potential buyers would offer for your house) or to determine whether your home’s value is truly high enough to qualify for a loan.
Do You Need an Appraisal?
You need a home appraisal as a homeowner refinancing your mortgage or determining the best price you can get when selling. You also need a home appraisal as a homebuyer to submit to lenders when buying your home.
Some loans, such as a home equity loan or a VA loan (for veterans), require the applicant to get an appraisal on their home or the one they plan to purchase. An appraisal proves to the lender that the house is worth the amount they’re lending you. Otherwise, they risk you defaulting on your loan.
You may also need an appraisal when canceling your private mortgage insurance (PMI) as evidence that your home hasn’t depreciated below its original value.
What Does an Appraiser Look At?
No matter why you need an appraisal, your appraiser will come from a third-party company to provide an unbiased evaluation of your home.
Among the factors your appraiser looks for are:
- Location of property
- Size of property
- Overall condition of your home
- Age of your home
- Materials used in construction
- Condition of interior and exterior amenities
- Condition of roofing, basements, and foundation
- Number of bathrooms and bedrooms
- Signs of water damage, infestation, or other problems
- Home improvements
- Safety features
Who Pays for an Appraisal?
In a home sale, homebuyers are typically responsible for the cost of an appraisal because their lender requires it. A seller may order their own appraisal, but this does not cover the buyer’s appraisal required by their lender.
If you are refinancing your home, you will pay for the appraisal. As the borrower, you are trying to prove to your lender that your home is worth as much as they’re willing to lend you.
General Tips to Avoid a Decrease in Home Value
While you certainly can add to your home to increase its value, maintaining the features you already have to avoid unnecessary value reductions is a good place to start. Even with regular upkeep, your home’s condition can always improve.
Below are some inexpensive ways to prevent your home’s value from decreasing before an appraisal.
Make Small Repairs
Walk through your entire house and make note of any damaged or malfunctioning features. Look for dripping faucets, running toilets, loose screws, dead light switches, cracked tiles, and more.
These minor but often noticeable issues can decrease your home’s value. We recommend addressing these small issues as your base level of action because making repairs will get you a higher appraisal report.
You may want to get a home inspection to more reliably find these problem areas with a professional inspector.
Touch Up Your Walls
Your walls cover most of your home’s surface area, so your appraiser may notice imperfections. Refresh your walls and ceilings to open up the space and give a more healthy overall impression of your home.
Choose neutral or white paint for your walls and ceilings, as these colors appeal to a wider range of homeowners and will make your house appraise for more. These colors also make smaller spaces feel bigger and larger spaces feel even more spacious.
Along with paint, fill holes made from long-forgotten nails and repair damaged baseboards and trim. If you choose not to repaint, make sure you clean your walls of scuff marks, stains, and other eyesores.
Inspect and Repair Appliances
Home appliances like dishwashers, refrigerators, washing machines, and central AC units are essential components of any home. While you should always maintain and routinely inspect your appliances, give them one last run-through to ensure everything functions properly.
If you or a home inspector find an issue with one of your appliances, call the relevant professionals who can make the necessary repairs. You can also visit the Better Business Bureau website and search for companies in your area specializing in appliances.
Declutter and Deep Clean
Appraisers aren’t supposed to take much stock into furniture, decor, and other non-permanent features.
That said, part of their job is to look at your home’s architecture and capacity for space. The cleaner and more organized your home is, the better your home’s overall condition and image— and, therefore, value.
Maximize your space by hiding your extra personal belongings or finally donating furniture and items you’ve been meaning to get rid of. For built-up dirt, consider hiring a deep cleaning service or doing it yourself with our ultimate spring cleaning checklist.
Ways to Increase Home Value From the Interior
After addressing all the issues that can devalue your home, raise the value of your home’s interior with some minor or major adjustments. We outline these adjustments in order from simplest to most complex below.
First, A High Appraisal on Your Home Is Not Guaranteed
While the methods we list below have the potential to increase your home’s value for an appraisal, it’s not a guarantee. We discuss the risks associated with trying to add value to your home toward the end of this article.
Make General Interior Replacements
Before an appraisal, walk through your home and note any outdated or worn-out features you could replace. Mind the following areas to help you focus your updating efforts:
- Lighting fixtures
- Windows and casing
- Curtains, blinds, and shutters
- Doors, knobs, and hinges
- Cabinet and drawer handles
- Plumbing fixtures
Clean, Repair, or Replace Flooring
You may want to replace your flooring if it’s heavily cracked, warped, or damaged.
Hardwood flooring is the best choice for adding value to your home, but you can also opt for vinyl or laminate flooring as a more affordable substitute. Consider replacing carpeting, but if you prefer to keep it, focus on the problem areas.
You can also hire a professional to clean your hardwood or carpeting before your appraisal.
Update, Expand, or Add a Bathroom
One of the most important areas of the house is the bathroom, and appraisers recognize that. Add another bathroom to your home or expand a half bath (toilet and sink) to a full bath (toilet, sink, shower, and bathtub) to increase your home’s appraisal value.
If you want to update your current bathroom, you may choose to focus on all or some of the following:
- Cabinetry
- Vanity
- Flooring or tiling
- Fresh paint
- Energy-efficient upgrades
- Plumbing fixtures
Renovating or adding a bathroom can be a time-consuming process. If you go all in, start a few months before your appraisal for ample time.
Remodel Your Kitchen
As with bathrooms, the kitchen is a high-traffic and high-value room in your house. For a few ideas, you can paint the kitchen cabinets, add stainless steel appliances, change the tiling, or install new marble or granite countertops.
Read our article about tips for saving money when remodeling your kitchen. In it, we outline these six ways to achieve a more affordable kitchen remodel:
- Keep your current kitchen’s layout.
- Refurbish cabinets instead of replacing them.
- Choose a more affordable stone countertop
- Fix instead of replace appliances.
- Buy a cheaper or smaller backsplash.
- Paint your kitchen yourself.
Add a Bedroom
An appraisal looks at houses similar to yours in terms of size and features, including the number of bedrooms. If your house has only one bedroom, your appraiser will compare its value to other single-bedroom houses. You can add another bedroom to increase your home’s appraisal value because it would then be a multi-bedroom household.
Adding or expanding a bedroom is beneficial to your home’s value when it meets the following criteria:
- The bedroom has enough space.
- Your updates don’t take up valuable space like a garage, yard, or driveway.
- The new bedroom’s location makes sense within the house.
- The layout and design of your new bedroom match the rest of the house.
Of course, this is a large undertaking that will take lots of time, so plan well ahead for your appraisal if you choose to go this route.
Ways to Increase Home Value From the Exterior
As with the look of your home’s interior, you’ll want to boost your curb appeal. Homes with clean and maintained yards have more value than those with disheveled yards.
Generally, organize and prepare your front yard for your appraiser’s visit by doing the following:
- Mow the lawn.
- Remove dead plants and trees.
- Pull weeds from pots, the driveway, and pathways.
- Clean windows.
- Add fresh mulch to trees.
- Sweep the front porch.
- Touch up any defects in your roofing, siding, driveway, and porch.
- Remove any hazards.
Consider the following ideas for your home’s exterior to increase your home’s value for appraisal beyond basic tidying:
- Replace a worn-out garage door: The Uniform Residential Appraisal Report, one of the most commonly used forms in the US for real estate appraisals, specifically calls out the garage and the condition of its door. Consider repainting or replacing it if it has dents, marks, or functional damage.
- Fence in your backyard: Solid wood and stone fences are popular choices to add privacy to a backyard and improve your home’s appraisal value.
- Construct a Florida room: Florida rooms or sunrooms maximize natural light with large windows or screens on all or most walls. If you have a pool area, consider converting it into a Florida room with a screened enclosure.
- Install hurricane shutters: If you live near a coast that experiences strong storms, consider adding hurricane shutters and impact windows. These safety features add both monetary value and peace of mind.
- Replace your mailbox and upgrade your house number: Make it easier for guests (and your appraiser) to find your home and give a great first impression that can add overall value to your home.
- Add amenities: Consider adding an in-ground pool, patio, deck, or other outdoor features if they suit your home’s location.
- Improve curb appeal even more: Boost your home’s external aesthetic with fresh exterior paint, an illuminated walkway, new trees, and vibrant potted flowers on the porch.
Warnings About Attempting to Increase Your Home’s Value
Although we listed plenty of upgrades to increase your home’s value before an appraisal, some ideas won’t have a high return on investment (ROI). The cost of implementing some features, such as expanding a bedroom, could exceed the amount of value it adds to your appraisal.
These features may be worth investing in if you plan to live in your house for a long time. But if you plan to sell your home immediately, adding features that don’t recoup their full cost isn’t worth it.
Some features might even lower your home’s value in certain cases. For example, some homebuyers won’t value features with regular maintenance costs, like a swimming pool or fireplace.
Additionally, some areas see home features as “over-improvements.” Homebuyers are less inclined to pay more for a house in a neighborhood with a much lower average price because the house will seem overpriced—even if the features warrant the higher price.
If you’re part of a homeowners’ association (HOA), it may not even allow you to fulfill certain projects.
Lastly, don’t invest too much into personal property, like furniture and decor, as these generally aren’t included in the appraisal.
It’s important to speak to a professional financial advisor to determine if your renovation or remodeling efforts add value to your home.
Some Factors Are Out of Your Control
Just as some upgrades are more expensive to implement than they are worth, some of your home’s traits are unchangeable.
Your appraiser will look at your home’s location and age, which you’ll have to take as facts out of your control. Similarly, the current housing market will affect your appraiser’s comparative analysis. There isn’t much you can do to change supply and demand.
How Else to Prepare for an Appraisal
After doing all you can to give your home a better chance of increasing its value, you should prepare for the actual appraisal.
Remember to keep a written record of all the home upgrades you make and their receipts for your appraiser’s easy reference when calculating your home’s value. You can include updates like new appliances, renovated bathrooms, and replaced countertops to this record.
Make sure you know as much about your home as possible in case the appraiser has questions. That said, give the appraiser space to do their job objectively without distraction.
Add Value When It Makes Sense
Sometimes, adding to your home doesn’t equal added value. It’s up to you to decide if a feature is important to include on your property, whether for safety, to increase value, or to sell your home faster.
If you’re refinancing your home, you’ll want to research your neighborhood, the housing market, and what features or renovations make the most sense to add value.
Above all, what adds value to a home appraisal are often minor repairs, cleaning, and decluttering. These are some of the easiest and least expensive ways to increase your home’s value—and might even make you feel like you’re in a new house.