It can be hard to place a monetary value on something that carries sentimental value.
But when you decide to sell your home and find yourself tasked with pricing the place you hold so dear, how do you do it right?
As Gregory Barr, chief appraiser for Graham Appraisal in Glasgow, Kentucky, explains, all too often homeowners expect a higher appraisal value for their home when they put it on the market. “When we come by, everyone thinks their house is worth a lot more. When the tax assessor comes by, it’s worth a lot less,” he says.
[Read: The Guide to Selling Your Home]
At the end of the day, your home is worth as much as someone else will pay for it – and it's an appraiser's job to estimate what that value could be. “The market value is what a prospective buyer is willing to pay for the subject property,” explains Kelly Kellogg, owner of Appraisal Experts Inc. in the Orlando, Florida, area and author of “ABCs of a CMA,” which provides real estate agents with a breakdown of comparative market analysis to price and sell properties.
An appraisal can be used at different stages of the home selling or buying process by the buyer, seller or lender to determine the market value of a home. The appraisal process is often helpful for owners preparing to put their home on the market and especially when a seller and real estate agent have trouble agreeing on an initial asking price.
If you’re told your home is worth less than what you thought it was, what could be the cause? Appraisers weigh in on some of the major factors that could be dragging down the value of your home.
Here are some potential reasons your home value is lower than you expect:
- Your house doesn't compare to others in your neighborhood.
- Your home is near undesirable landmarks.
- You overimproved your house.
- The appraisal missed some details.
Your Home Doesn’t Compare to That House Down the Street
Appraisers use recent transactions of similar homes in the area to assess your home’s potential value – but the houses must have similar amenities and features and be in similar condition to be truly comparable.
According to Carole Christensen, owner of Appraisal Minnesota is Northfield, Minnesota, homeowners are often confused when they receive an appraisal value that's lower than they expected, and argue the neighbor’s house down the street sold for X more dollars. “Well, (your) neighbor’s house has a brand new kitchen and baths and is 30 percent larger than your house and is a different design,” Christensen says.
The number of bedrooms in particular is a key factor in selecting comparable sales. Kellogg says appraisers aim to compare prices of homes with the same number of bedrooms because that detail changes what the potential buyer is willing to pay.
“Typically we find that three-bedrooms sell for a higher value variance than a two-bedroom dwelling. You want to compare apples to apples if possible,” Kellogg says. However, homes in a 55-plus community may be different, she adds. There, homes with two bedrooms may have a higher value than a three-bedroom property, which is considered too big.
Planes, Trains and Automobiles Are Always Zooming Past Your House
There are a lot of things you can control when it comes to ensuring at least a certain value in your home, but some are outside your reach – and outside your property lines.
Christensen says that while a lake or pond can add value to a home, property backing up to a busy road, airport or power line is typically less desirable. “If you have a highway or a railroad, that’s not conducive to a good sales price. But that’s the exterior stuff you can’t do anything about,” she says.
You Went Overboard With Upgrades
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 will often sell within a 20 percent price range of each other, depending on the age of the homes and renovations, Christensen says.
But spending $100,000 on improvements doesn’t mean you’ll sell your house for an additional $100,000 – 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.
The improvement choices should be based on those of similar homes in the area, Kellogg says. When it comes to installing a solar panel system or swimming pool, you’ll likely recoup some of that cost if they’re common features for similar homes. “You don’t want to be the first person to make that improvement in your neighborhood,” Kellogg 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. Below, 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.
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 (the homeowner) can provide the bank with some additional comparable sales data, or information about the subject property,” says Stephen Wagner, 2019 president of the Appraisal Institute.
Ask for the Price You Think Is Best
An appraised value that's 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.”
Just keep in mind that it's not easy to pass off a home for more than it's worth. The appraised value reflects what people would be willing to pay, and it can be hard to find an outlier who will pay significantly more.
Fix Things Up
A new coat of paint and tidying up around the property can go a long way. Any real estate professional will encourage you to make your home clean and clutter-free, both inside and out, before potential buyers start touring.
If you're looking to make an improvement that will help make buyers value your home more, Wagner says new flooring "can be one of the easier, relatively cost-effective repairs that you can do."
[Read: A Checklist for Home Inspections]
Get the Neighbors to Help
To draw more interest and potential bids, ask your neighbors to park in their driveway, which will make the street less crowded. Kellogg says the fewer cars parked on the street in a subdivision, the better for any homes on the market.
It’s only a slight inconvenience, and Kellogg says the neighbors will benefit in the long run. “As a neighbor, you want the person who’s moving to sell their home for the highest (price) the market will bear," she says, "because that affects your real estate value indirectly.”
The bottom line: Be ready for an appraised price tag below the one you may have in your head – and be prepared with a few tricks to increase interest and add value to your home.
Ensure a quick sale.
Selling your home quickly not only allows you to move on with your life, it also means fewer days of keeping your home in pristine condition and leaving every time your agent brings prospective buyers for a tour. According to real estate information company Zillow, the best time to list a home for sale is on a Saturday between May 1 and 15; homes listed during those times sell six days faster and for 0.7% more than the average annual home price. But how fast your home actually sells, and at what price, depends on factors beyond timing. Here are 10 secrets to selling your home faster, no matter when you list it.
Updated on March 20, 2020: This story was published at an earlier date and has been updated with new information.Pick a selling strategy.
Pick a selling strategy.
Before putting a for sale sign in your yard, it's important to pick the selling strategy that will work best for you. The for-sale-by-owner option may be best if you feel confident in your ability to market the home and negotiate. If your time is better spent on other details, a real estate agent could be best. If you need to sell the home quickly, you may want to inquire with an iBuyer, an entity that can make the deal close faster than the typical homebuyer. You should feel confident in the selling strategy you choose, and avoid switching from one to the other while your house is on the market. Buyers could be turned off by the constant changing of circumstances.Invest in a professional photographer.
Invest in a professional photographer.
According to NAR's 2019 Profile of Home Buyers and Sellers, 44% of recent buyers started their search online. Of those, 87% found photos very useful in their home search. If your listing photos don’t show off the features of your home, prospective buyers may reject it without even taking a tour or going to the open house. Hiring a professional photographer and posting at least 30 photos of your home, inside and out, is a good way to attract buyers. Photography is often free for home sellers, as shoots are often conducted at the expense of real estate brokers as part of marketing the property.Clean everything.
(People Images/ Getty Images)
Nothing turns off buyers like a dirty house. Hire a company to deep clean if you can’t do it yourself. “When the (home) is on the market, no matter what time of day or night, it should be clean and neat,” says Ellen Cohen, a licensed associate real estate broker with real estate brokerage Compass in New York City.
Key places to clean while your home is on the market include:
- Kitchen countertops.
- Inside cabinets and appliances.
- Floors and room corners where dust collects.
- Bathroom counters, toilets, tubs and showers.
- Inside closets.
- Windows, inside and out.
- Scuffed walls, baseboards and doors.
- Basement and garage.
Depersonalize the home.
Remove all your family photos and memorabilia. You want buyers to see the house as a home for their family, not yours. Remove political and religious items, your children’s artwork (and everything else) from the refrigerator and anything that marks the house as your territory rather than neutral territory. The same goes for any collections such as figurines, sports memorabilia or kids' toys that can make a buyer think less about the house and more about you. Family photos can be replaced by neutral art or removed entirely – just be sure to remove any nails and repair nail holes where any hanging photos used to be.Let the light in.
Let the light in.
People love light and bright, and the best way to show off your house is to let the sunshine in. Open all the curtains, blinds and shades, and turn lights on in any dark rooms. If the natural light situation is lacking in any room, strategically place lamps or light sources throughout to set the mood. And while your house is on the market, open all curtains and turn on lights every time you leave your house for work or errands in case you get word that a buyer would like to tour the space before you get home.Be flexible with showings.
Be flexible with showings.
Buyers like to see homes on their schedule, which often means evenings and weekends. Plus, they want to be able to tour a home soon after they find it online, especially in a hot market where they're competing with other buyers. If your home can be shown with little or no notice, more prospective buyers will see it. If you require 24 hours’ notice, they may choose to skip your home altogether. "That's one less person who gets to see the property," Cohen says. Be ready to leave quickly as well – if you're still cleaning up or hanging around outside when the buyer arrives, it can make for an awkward interaction.Set the right price.
Set the right price.
No seller wants to leave money on the table, but the strategy of setting an unrealistically high price with the idea that you can come down later doesn’t work in real estate. Buyers and their agents have access to more information on comparable homes than ever, and they know what most homes are worth before viewing them. A home that’s overpriced in the beginning tends to stay on the market longer, even after the price is cut, because buyers think there must be something wrong with it. "Pricing correctly on the lower side tends to work much better," Cohen says.Remove excess furniture and clutter.
Remove excess furniture and clutter.
Nothing makes a home seem smaller than too much big furniture. Rent a self-storage container or a storage unit and remove as much furniture as you can. It will immediately make your home seem calmer and larger. Remove knickknacks from all surfaces, pack them away and store the pieces upon which you displayed them. Take a minimalist approach to books, throw rugs and draperies, and clear off your kitchen and bathroom countertops, even removing appliances you normally use. If you can scale down the contents of your closets, that’s even better, because it makes the home's storage space look more ample.Repaint in neutral colors.
Repaint in neutral colors.
A new coat of paint will do wonders to freshen up your home, both inside and out. This is the time to paint over your daughter’s purple bedroom, nix the quirky turquoise bathroom and cover up the red accent wall in your dining room. Busy wallpaper can also turn off potential buyers. Your goal is to create a neutral palette so buyers can envision incorporating their own personal touches in the home. "You just want people to see the space for what it is," Cohen says. Rather than a stark white, consider neutral shades of gray, taupe and cream on the walls.Spruce up the front of your home.
Spruce up the front of your home.
You’ve heard it 100 times before, and it’s still true: Curb appeal matters. You don’t get a second chance to make a first impression. A new or freshly painted front door, new house numbers and a new mailbox can breathe life into your entryway. Fresh landscaping and flowers in beds or in pots also enhance your home’s first impression. Trim trees and bushes, tidy up flower beds, remove dead leaves from plants, clear out cobwebs from nooks near the entrance and pressure-wash walkways, patios and decks. Leave the outdoor lights on, too, because prospective buyers may drive by at night.Here are 10 tips to sell your home faster:
Here are 10 tips to sell your home faster:
- Pick a selling strategy.
- Invest in a professional photographer.
- Clean everything.
- Depersonalize the home.
- Let the light in.
- Be flexible with showings.
- Set the right price.
- Remove excess furniture and clutter.
- Repaint in neutral colors.
- Spruce up the front of your home.
Updated on April 10, 2019: This story was previously published on Dec. 28, 2015, and has been updated with new information.
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at email@example.com.