How can you boost your home’s market value? How can you boost your home’s appraised value?When we talk about a home’s valuation, we sometimes talk as if there is one agreed-upon number at which we can arrive. However, the final sale price can be impacted both by a home’s tangible properties – square footage, fixtures and finishes – and intangible properties like location and the state of the market. In some cases, the market will assign a higher or lower value to your property than a more objective evaluator will assign. This is the difference in home appraisal vs market value.

When you’re selling your home, you need to ensure both a supportable appraised value and a solid market value. While appealing to the market is essential for securing the highest possible sale price, you also need to secure a similar appraised value to ensure that the price you negotiate is the price you receive at the closing table.

Is appraised value higher than market value?

Not necessarily. The appraised value is determined by an evaluation conducted by a third-party licensed appraiser. It is based on comparable properties that have sold in your area along with the value the appraiser places on certain features of your home, like its size, location, and any improvements you’ve made to the property.

Market value is often based on similar values but it isn’t necessarily the same as appraised value. For example, market value can be affected by changes to the economy or inventory in an area. It can even be impacted by personal preferences and needs. 

For example, a home buyer might be willing to pay more for a home because of its proximity to their place of work or the school that their children attend. Thus they’d be willing to pay more for a convenient location. Maybe they’d pay a premium for the home because it’s decorated in a style they like or because it has a view that they love. These personal preferences would not necessarily affect the appraised value of the property.

Do houses usually appraise for more than the selling price?

Because appraisals are based on comparable prices for homes that have already sold, there may be a time lag between the appraised value and fair market value, especially if there are inventory or demand changes in the current market. For example, in 2020 and 2021, rapidly escalating demand and low inventory in many markets made it difficult for appraised values to keep up with sale prices. To learn more about the timeline, visit our post answering the question, “How long does it take to sell a house?” 

Assuming fairly stable market conditions, however, the appraised value of a home is usually close to the market value. This is especially important in the case of home purchases with a mortgage. In order to protect their financial interests, mortgage lenders generally require a real estate appraisal to ensure that the home is worth at least the amount that’s being financed.

When you begin working with your real estate agent, they will prepare a CMA or comparative market analysis. This will examine some of the same factors that an appraiser would, including comparable property values for recent sales in your area. In addition, the CMA will include up-to-date listings so that you can see if there have been recent changes that would affect the value of your property in the current market.

If you are in any doubt about the potential appraisal value of your home, you may choose to have a pre-listing appraisal conducted for your home value. This will allow you to see how an appraiser would view your property and will set appropriate expectations for your sale price. It will also provide backup for you if a subsequent buyer appraisal comes in lower than you expect.

What do you do if the appraisal comes in lower than the agreed-upon sale price?

If the appraised value comes in lower than the sale price you’ve negotiated with your buyers, you have a number of options. Any of the following can occur:

• You or the buyers may be able to appeal the appraisal if you can show that an error was made in the appraisal report or that there are elements that the appraiser missed. Corrected information, more appropriate comps, or information about recent improvements may make a difference in the appraiser’s valuation.
• If there is an appraisal or financing contingency in place, the buyers may ask you to renegotiate the sale price based on the appraised value. It is up to you to decide whether you want to do that or whether you want to try to find a new buyer. However, that new buyer’s appraisal will likely be similar to the current one unless there were significant errors in the report.
• If the buyers are motivated, they may be comfortable adding cash to the transaction to make up the difference between the appraised value and the sale price. This will allow the bank to approve financing for a lower amount and keep the transaction moving forward.

Ultimately, when you’re selling your home you need a real estate professional who can help you navigate the unexpected. That’s why it’s important to discuss your financial goals for the transaction and understand all of the options available to you at every step of the process.

How can you boost your home’s appraised value?

One of the most important things you can do to ensure that your home appraises properly is to make sure it is well-maintained. In some cases, the appraiser may not even come into the home and may make his or her decision based on a combination of an external inspection and publicly available information, including the MLS listing. Thus, curb appeal will have a major impact, as will the marketing of the property, including photography, video tours, and other materials.

If your property has been updated or upgraded significantly, make sure that the appraiser is aware of it. In addition, if the comparable properties the appraiser used to determine value are not true comps – either because they are significantly different from your home or because the location is not truly comparable – it’s important to point it out.

How can you boost your home’s market value?

By working with an experienced real estate agent, you can identify the increase property value and secure a top- and improve the way your home is perceived by the market. These include:

• Home improvements and upgrades
• Kitchen and bathroom remodels
• Additional square footage
• Changes to landscaping and curb appeal
• Smart-home updates
• Home staging 
• Professional marketing strategies and materials

Remember, the better your home looks both online and in-person, the more likely you are to increase property value and secure a top-dollar offer. 

Be careful, however, that you don’t over-improve your property. This can occur if you add updates that are out of keeping with other comparable homes in your area or if you add an addition that increases the square footage beyond the norms for your area. In these cases, it can be difficult to recoup the costs associated with the upgrades in the sale price.

Pricing your home properly and optimizing it for the market are key to the kind of seamless sale you’re looking for. It starts with the right real estate agent – and there’s no better place to find a trusted agent than Newzip. Our agent finder connects you with the right real estate professional in your market so that you can begin your home sale process. What’s more, our service is free, your satisfaction is guaranteed, and you even get cash back after you close.