Resources

Most of us are somewhat uncomfortable when it comes to strangers entering our personal space. Many people are uncertain as to what an appraiser is actually looking for when viewing your property and completing an inspection. We’ve provided a number of tips and suggestions that may help put you at ease making the experience a little less uncomfortable. While none are absolutely necessary, they will leave the appraiser with a good impression. Treat the inspection as though the appraiser were a potential buyer.

• Improve your curb appeal by cleaning up any debris, toys or other personal items around the yard particularly in the front. Mow and trim your lawn. Remove any pet droppings.

• Remove any obstruction within close proximity to the house which may hamper the appraiser’s ability to properly measure the exterior. These items could include BBQ’s, patio furniture, large trash containers, bikes etc.

• Clean and declutter each of the rooms and turn the lights on around the house so that the appraiser can better view your home. Remember, most lenders require a number of interior pictures.

• Make any necessary small repairs like broken tiles, un-hung closet doors, broken windows, small carpet stains etc.

• Freshen up any areas that may require some paint such as faded walls, chipped paint, small holes etc.

• Make a list of upgrades of anything you feel is value related or contributes to the value of your property and have it ready for the appraiser. Upgrades could include landscape enhancements, patios, decks, new flooring, kitchen cabinetry, paint and so on.

• Also if you are aware of any sales within your neighbourhood that you would like the appraiser to consider, please speak up. While the appraiser will do a comparative analysis as part of the appraisal process, let him/her know why you think your home is different.

• And finally, remember to work with the appraiser not against them.

We consider the appraisal process to be the “checks and balance” in the real estate industry. Buyers tend to rely more and more on those motivated parties for value verification rather than seeking the independent, unbiased opinion of a trained appraiser. Most people have been convinced that the process is an inconvenience.

Many home buyers are unaware and assume that just because the lender has approved your mortgage loan, that it is verification that you must be paying fair market value. This may not be the case in some instances as some lenders now have come to rely less and less on the actual appraisals and more on risk tolerance levels. Further, it may even be very likely that the valuation of your home is completed with an AVM (Automated Valuation Model) with no one ever going to view the property let alone inspecting it. These software programs are typically statistically based and lack judgement. Regardless if the lender does not require it, we strongly recommend always having an appraisal completed. We’ve shortlisted several suggestions to consider before buying a home.

• Be sure to always include the condition on your purchase agreement that “the sale is subject to the appraised value being equal to or greater than the purchase price”. This not only protects you if the property value is overstated but also, if it is, gives you the opportunity to go back to the seller and renegotiate the purchase price sometimes saving thousands of dollars. Regardless of the lender’s requirements, you’ll have an unbiased, objective opinion and assurance that your paying fair market value.
• One of the best scenarios for buying a home is to have an appraisal completed before you make an offer and to utilize it as part of the negotiation process. The relatively small appraisal fee, in contrast, can go a long way in saving you potentially thousands of dollars or from a misguided venture.

The due diligence process is an important part of purchasing a home. We suggest taking advantage of all the industry members in the process seeking their expertise and guidance throughout the process.

We’re asked many times by homeowners the same question:

“What renovations or improvements can I make to increase the value of my home?

It’s an excellent question which can be considered in many contexts likely have a number of answers depending on the scope and conditions on which the renovation might be made. We can start by offering several important considerations:

Renovations that add features to a home that other homes in the neighbourhood already have such as a second bathroom, for example, have a higher recovery rate than features not shared by neighbouring properties.

Renovations done on a home with a lower market value than the others in the neighbourhood provide a higher recovery rate than renovations done on a home which is worth more than neighbouring properties.

Poorly done renovations may have no positive impact or worse, actually, reduce the value of a home.

Ensuring that a home is in good repair and well maintained is essential. However, renovations done on a home which has maintenance problems will have a much lower impact on its resale price.

While most renovations will not increase the market value of a home by more than the amount spent, it is hard to put a price on the enjoyment owners get from home improvement.

Source: Appraisal Institute of Canada Survey-August 2008-RENOVA

Kitchen

According to the Remodeling 2011–12 Cost vs. Value Report (www.costvsvalue.com) costs recouped on minor kitchen enhancement is 72.11% for a midrange project, national USA average. According to the Appraisal Institute of Canada RENOVA, the estimated return on investment is in the range of 75%-100% based on an approximate project cost of $12,000 to $15,000.

Bathroom

According to the Remodeling 2011–12 Cost vs. Value Report (www.costvsvalue.com) costs recouped on a bathroom addition are 51% and a bathroom remodel are 62.2% for a midrange project, national USA average. According to the Appraisal Institute of Canada RENOVA, the return of investment of installing an additional bathroom on the main floor is in the range of 80%-100% based on an approximate project cost of under $5,000. The estimated return on investment for a renovated bathroom is 75% to 100% based on an estimated project cost of $5,000 to $8,000.

Paint

One of the cheapest ways to freshen up your home for resale. Include your homes interior and exterior as well. Items such as fascia, trim, decks and sheds. Keep in mind to stay away from super bright colours such as hot pinks, neon greens etc. If you’re not 100% confident of your artistic abilities, hire a professional. Painting a home is generally an affordable enhancement. Some statistics suggest that the estimated return on investment for paint is 50% to 100% based on an estimated project cost of $1,000.

Basement Remodel

Avoid lots or walls and hallways which may make the area look small dark or confined. Make sure your basement includes a bathroom as well. Don’t even think about adding a room to the main level if your basement is not developed. If your area permits a suite, you may consider adding the additional mortgage helper. But beware, some buyers may not appreciate the value of suite as they may consider that it deprives them of additional living space. They may be well off enough that the yield on the rental does not outweigh the cost of the lost living space. According to the Remodeling 2011–12 Cost vs. Value Report (www.costvsvalue.com) …” cost recouped on a basement remodel are 66.8% for a midrange project, national USA average.

Landscaping

Given climates in southern Alberta most greenery is not visible all year round and well-landscaped yards can only be enjoyed for about 3 to 6 months depending on your tolerance to the elements. Landscaping improvements are considered to enhance your marketability especially with a well laid out site which includes good quality fencing, decorative garden area, mow strips, underground sprinklers, decorative lighting etc.. Not to mention your curb appeal. Most market participants like low maintenance sites that are kept with minimal effort and look their best throughout the year.

A researcher at Clemson University published research that evaluated the contribution of landscaping on the price of single-family homes. The sale prices of a sample of 288 homes were related to house characteristics, location and landscape quality. A house that ranked an “excellent” landscape quality rating could expect a sales price 4 to 5 percentage points higher (depending on the size of the lot) than equivalent homes with “good” landscaping and 8 to 10 percentage points higher than homes with a fair to poor rating. Henry, Mark S. 1994. The contribution of landscaping to the price of single-family houses: A study of home sales in Greenville, SC. J.Environ.Hort. 12 (2):65-70. June 1994

Disclaimer

Lethbridge Property Appraisal Inc. does not guarantee the quality, accuracy or completeness of any information on this website. This website may include inaccuracies or typographical errors and the information is provided without warranty or condition of any kind. Data on this site are provided ‘as-is’, and Lethbridge Property Appraisal Inc. makes no warranty, either express or implied, including but not limited to, warranties of merchantability and fitness for a particular purpose. In no event will Lethbridge Property Appraisal Inc. be liable for any direct, special, indirect, consequential or other damages, however, caused.