The current state of the market has many people selling and buying homes right now. In some cases, you may have checked to see how much you can afford to allocate towards purchasing a house. In some instances, you may be in the process of deciding if you should list your current home so that you can get a new one. Or maybe like so many other sellers, your property is under a contract and you’re in the midst of getting an appraisal. Whatever the case may be, knowing which factors can hurt a home appraisal is something that demands your time and consideration. Just like how there are many things which can help a home’s value, there are certain things which could negatively affect it. In this post, we take a look at what those factors are.
1) Bad Neighborhood
Even though several things can affect a house appraisal, they can be divided into two primary categories: market appraisal and property walkthroughs. Of these two categories, market appraisal is regarded as being the most impactful factor of a home appraisal. When it’s all said and done, location really is everything. Regardless of how beautiful your home is, if it’s situated in an area that is prone to vandalism, located in an under-performing school zone or experiences high crime rates, no amount of renovations will help to raise the price of the property beyond that particular neighborhood’s natural price limit.
Additionally, other properties within close proximity of your home can also affect the appraisal. For instance, if your home is located near a power line, railway, junkyard or busy street, you will receive a lower valuation than houses that are on a quiet street or a home that’s surrounded by local amenities.
2) State Of The Market
The real estate market has two states: buyer’s market and seller’s market. In a seller’s market, there aren’t enough homes for the amount of buyers that want to purchase. As a result of a high demand and low supply, this causes the prices of houses to go up. Therefore, the appraisal value tends to be high during a seller’s market. Alternatively, during a buyer’s market, the exact opposite occurs because the market has an abundance of inventory with few buyers who are willing to make a purchase.
3) Disheveled Properties
Properties in poor condition will always be appraised for less than what a similar property in good condition would receive. This is because by getting a disheveled property, the owner will have to spend additional funds to bring the house up to par. In fact, the appraisal value of a home will decrease in relation to the amount of money the buyer will have to spend on renovating a disheveled property.
4) Wrong Renovations
Contrary to popular belief not all renovations will increase a home’s value. In fact, getting the wrong renovations will decrease it. For instance, even if you spend $20,000 on a pool, this could actually decrease the home’s overall appeal because most people do not want to deal with the hassles of maintaining and spending additional funds on a pool.