What’s Dragging Down the Value of Your Home?
You upgraded too much. Updates and added amenities can be a great way to increase the value of your home, but don’t expect to get back what you paid for those changes when you sell the home.
Many subdivisions with homes that are similar to each other will often sell within a 20 percent price range of each other, depending on the age of the homes and renovations, Christensen says. For instance, a homeowner can make major upgrades, such as “a pool and a sauna, and an outdoor kitchen,” she says.
But spending $100,000 on improvements doesn’t mean you’ll sell your house for $100,000 more – and especially not in a subdivision where homes sell for $150,000 to $200,000. “They’re not going to get that back because the area does not support that,” Christensen says.
Barr says improvements made for the purpose of selling your home might not have the return on investment you’re hoping for either. “If you put in $10,000 worth of landscaping, it might help you sell your house faster, but no one’s going to give you back that $10,000,” he says.
What You Can Do With a Low Appraisal
If your home appraised for less than you were hoping for, you’re not doomed. The calculated value isn’t set in stone; it serves as a snapshot of the market at a certain time, rather than an everlasting price.
“If I’m at your house on the 15th of December and I do an appraisal, and the next day the house across the street sells, that could have changed [the value] dramatically,” Barr explains.
You can’t guarantee changes in the market, and you can’t change your neighborhood, but appraisers recommend doing a few things to ensure you understand your home's value, and they offer some easy fixes to increase interest from buyers.
Talk to the appraiser. It doesn't hurt to talk to the appraiser about what led him to the specific value of your home. And if you think something is missing from his conclusion, mention it. Lance Coyle, president of the Appraisal Institute and an appraiser in Dallas, says human error can potentially lead to a mistake in the analysis. "If it's not factually correct, 99.9 percent of appraisers out there are going to fix it, with no questions asked," Coyle says.
Even when all the facts are right, it's possible the appraiser is unaware of a similar house on the market that isn't available in the public record, and any missing transactions can have an impact on your home's value.
"Maybe you know your neighbor sold their house in the last six months. It sold off the [multiple listing service] and so not a lot of people know about it," Coyle says. "If you have a situation like that, then that's certainly something you'd want to convey to the appraiser."
Ask for the price you think is best. An appraised value lower than expected doesn’t mean there isn't a possibility you could sell your home for more money. If you believe you can get a higher offer, go for it.
“A seller can still sell the home or put the home on the market for what they believe the value is. But at least when a buyer comes along and makes an offer, now the seller has the appraisal to go back and say, ‘Oh, there’s something here, because I’m getting a similar offer [to the appraisal],’ and then they can negotiate,” Kellogg says. “Or if they get a lowball offer, the seller may decide to pull the appraisal out and share it with the potential buyer.”
