house appraisals?

[mtemm]

we are re-financing our house (knock wood!) and the appraisal is on friday. we have lost a lot of ground on our house since we bought it almost 5 years ago, and am hoping/praying the damage isn't too severe.

my question is, is there anything (aside from adding a new room or two, lol) at all we can do between now and then to help our house appraise well? my guess is not really, but figured it couldn't hurt to ask!

 

[Pakey]

Appraisals are based on structural aspects, not cosmetic ones.

 

[MarkBarbieri]

I'm assuming that you want the appraisal higher because it affects how much you can borrow. If you spent money improving your house, it would increase the appraisal, but you wouldn't have the money you spent. It seems like it would make more sense to use the money to reduce the amount you need to borrow.

For example, let's assume that you have a $200,000 loan on a house worth $190,000. You want to spend $20,000 to improve the value of the home. Let's assume that the $20,000 spent increases the home's value to $220,000. You can now refinance your $200,000 loan. On the other hand, if you applied that $20,000 to the loan, you'd only need to refinance $180,000. Because home improvents very rarely improve the value of your home anywhere near as much as they cost, it would probably be better to use the money paying down the house rather than improving it.

 

[Alex&Evan'sMom]

If you don't mind me asking, what kind of loan are you getting? If you are getting certain kinds of loans, they will make you do repairs to bring the house up to code, per se(flaking paint, loose trim, uneven flooring, leaky faucet etc.).

 

[ccgirl]

The PP was correct. Banks are really looking at adding living space for new appraisals and not so much cosmetic things. For example, I spent 40K on a kitchen remodel. When I had my house re-appraised; it did not go up bo 40K (nor did I expect it to). However, if you finished your basement, added a garage, or built an addition that would increase the appraisal as you increased living space. Please keep in mind that the banks looks at what houses around you have sold for and compare it to yours to get the appraisal. For example, if the house next to you just sold for $200,000 and it is 200 sq ft larger than yours, your appraisal would go down. Does that make sense? However, if you have a garage and they don't your appraisal would go up. The only "cosmetic" thing that comes in to play is condition of the house. Good, fair, average, above average. Hope this helps.

 

[wdwfan16]

I'm assuming that you want the appraisal higher because it affects how much you can borrow. If you spent money improving your house, it would increase the appraisal, but you wouldn't have the money you spent. It seems like it would make more sense to use the money to reduce the amount you need to borrow.

For example, let's assume that you have a $200,000 loan on a house worth $190,000. You want to spend $20,000 to improve the value of the home. Let's assume that the $20,000 spent increases the home's value to $220,000. You can now refinance your $200,000 loan. On the other hand, if you applied that $20,000 to the loan, you'd only need to refinance $180,000. Because home improvents very rarely improve the value of your home anywhere near as much as they cost, it would probably be better to use the money paying down the house rather than improving it.

Your example is great but the person did good in your example. The house appraised at $180K. They added $20K and now it appraises at $220K.

The more likely scenario is the $20K added 80% of $20K ($16K) to the appraisal so now it is $196K, still less.

You are correct the better way is to refi only $180K and apply the other $20K to the loan. The loan would have to be bought down if you are upside down on the loan.



I know a person who tried to refi and the bank would only do it if they paid 20% of the outstanding loan. That was not possible. In this example they would need $40K and then refi $160K.

 

[mtemm]

thanks all!

we are refi just to get a better interest rate. our rate wasn't bad, the new one is low enough that it is worth it. its just frustrating because we lost so much of what we put into the house (our downpayment) I'm just hoping it lands around where I think it should. hard to know, though, till we know. my house is a 4 bedroom (or 5, depending on how you look at it), 2.5 bath house, but it also has several upgrades that should place it in the higher end of what I am seeing. just anxious I guess.

I also realize that if there is nothing I can do at this moment to make it appraise for the higher end of the spectrum, well, then, there is no use worrying about it. it will be what it will be. I just figured it was worth asking, to make sure I wasn't missing something/not taking advantage of something.

 

[DISdreamin']

we are refi just to get a better interest rate. our rate wasn't bad, the new one is low enough that it is worth it. its just frustrating because we lost so much of what we put into the house (our downpayment) I'm just hoping it lands around where I think it should. hard to know, though, till we know. my house is a 4 bedroom (or 5, depending on how you look at it), 2.5 bath house, but it also has several upgrades that should place it in the higher end of what I am seeing. just anxious I guess.

Honestly, in my very limited experience, refi appraisals are low. I'd read that somewhere, but I lived it last month. We had a refi appraisal done on our home, and it was only $18K more than the house cost to build five years ago. We've done a driveway, extensive landscaping, a fence, a deck, partially finished the basement, etc. And best of all, homes in this neighborhood (smaller homes sq ft wise) regularly sell for far more than our home appraised for. We have some - but not all - higher-end finishes (hardwoods, ceramic tile, travertine, etc) and our home appraised out far below what a smaller home adjacent to ours with builder finishes sold for a couple months ago!

Good luck, and I hope it comes back as what you need. My thought on this is that if you are doing a refi with the same bank, what difference does it make to them? You owe them the money anyways, KWIM?

 

[mtemm]

ugh, well that is depressing. did you fight the appraisal? (is that even possible?)

well, it will be what it will be. I'll keep my hopes that it will be what I need it to be. no point in worrying until we know the answer.

am curious if others have found what disdreaming said to be true for them as well?

 

[LilyWDW]

thanks all!

we are refi just to get a better interest rate. our rate wasn't bad, the new one is low enough that it is worth it. its just frustrating because we lost so much of what we put into the house (our downpayment) I'm just hoping it lands around where I think it should. hard to know, though, till we know. my house is a 4 bedroom (or 5, depending on how you look at it), 2.5 bath house, but it also has several upgrades that should place it in the higher end of what I am seeing. just anxious I guess.

I also realize that if there is nothing I can do at this moment to make it appraise for the higher end of the spectrum, well, then, there is no use worrying about it. it will be what it will be. I just figured it was worth asking, to make sure I wasn't missing something/not taking advantage of something.

Ahhh... appraisals.

How does your home stack up to other homes in similar markets when it comes to square footage, number of beds/baths, finishes, outdoor spaces, ect? What do you mean by 4 bedrooms or 5? Either it is a bedroom or it is not and this will make a difference in the appraisal. I have seen people say they have 5 bedrooms, but the appraisal only counted 4 of them. Why? Because by code they didn't meet the requirements for a bedroom because of things like means of egress or the septic wasn't the correct type/size for another bedroom to be listed.

How is the overall condition of the home? How old is the roof? When was the last time you replaced the windows and how old are they? How old is the siding and what sort of condition is it in? Have you done any work in the bathrooms or kitchen? Do you have a garage?

I could go on...

Oh, and just as an aside... when you do make changes to a home such as refinishing a kitchen... do NOT over improve! You will end up spending a lot of money that you will not get back. Just because you have a gourmet kitchen with high end finishes and appliances doesn't mean that people will be willing to pay for them in an area. This is a mistake you see over and over and then people wonder why they can't get the full cost of them back.