Refinancing 101: Don’t Let Appraisal Kill Deal (Part 1)

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This is a sponsored column by Eve Thompson of Reston Real Estate. She writes twice weekly on Reston Now.

The other day, a friend told me her appraisal for a home equity loan came in $40,000 less than comps in her neighborhood. Why did this happen? Because she didn’t realize she needed to clean and straighten the whole house (especially the huge cobwebs in the windows). It was a dark, rainy evening and the house looked dingy from the outside, and they also need to do some upgrades. Granted, the home equity loan is to pay for the upgrades. But still, $40,000 below market value? That is significant.

Do not let this happen to you.

Here is the thing to remember for any appraisal — whether you’re refinancing, apply for a home equity loan, or selling: appraisers are people, and they are just as influenced by physical appearances as buyers are. Your house has to look it’s best when the appraiser comes through lest they appraise the property much lower than it’s worth.

My friend’s story is so common, I decided to do a two-part series on appraisals. Part one includes the steps you need to take to make your property physically appealing. In part two, I’ll discuss the things you can do to make the appraiser’s job easier.

To start, know that physical appearance matters. A lot. Appraisers can assign an “effective age” to your home — this is the age they assign after considering how recent the updates are and the overall condition. Torn wallpaper, vinyl floors curling, threadbare carpets, chipped paint — all of these things add up to the overall age of your home. And that will drive appraisers to comps with the same effective age. So, make your house look good.

1. Spruce it up. Every appraiser I know agrees that it’s important to keep the look, feel, and condition of the property as updated and cared-for as possible. Appraisers probably won’t look under your bed, but they will look at overall how clean the home is. Clean the marks of your walls and the fingerprints around door handles. Wash your windows. Replace the peeling vinyl floor. All of these things actually affect the value of your home, and they add up.

This is also a good time to do some of the upgrades you’ve been thinking about. Paint, new carpets, lights, and plumbing fixtures are relatively low cost upgrades that can make a huge difference in your appraisal.

And keep in mind that appraisers often value houses in $500 increments. Repairs that should be made count against your property. So fix leaky faucets, stained drywall, and cracked windows. Make a list and call your handyman — these things can often be knocked out in one day.

2. Address the curb appeal. The appraiser will start the appraisal at the curb, so make sure the exterior of your house looks good. Mow the lawn and do some weeding. If your home needs a good power washing, do it. Many Reston homes tend to collect algae on the roofs (a downside of the wooded communities), so get the roof cleaned. You want the house to look like it’s in mint condition so that it isn’t compared to foreclosures or other lower-value homes.

3. Make it comfortable. Along the lines of making your home physically appealing is ensuring it’s physically comfortable while the appraiser is there. You may be comfortable in a cold house, but your appraiser may not be. Turn on the heat in the winter and the air conditioner in the summer. You also don’t want them to think the heater or air conditioner is broker!

Improving the physical appeal of your property alone will increase the value of your appraisal. In part 2, I’ll talk about some of the other things you can do to boost that appraisal.

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