WHAT APPRAISERS LOOK FOR
Two key things go into an appraisers assessment.
A client of ours recently went through a refinance for her 1912 character home. As a result of the house being such an old timer, the lender wanted to ensure there was value and asked to see an appraisal.
This is pretty typical for a unique home with such a wide range of possible states it may have been in. As we mentioned in our article about property assessments and refinancing, an appraiser takes into account land value and property size, but also considers the interior of the home as well as the current local real estate market.
So, what is an appraiser looking for? Two key things go into their assessment.
First, they tour the inside of the home and make notes on the things they see. With permission, they take interior photos. For example, custom maple cabinetry will have more value than MDF cabinetry.
They look at the number and size of bedrooms with closets, appliances, and mechanical (such as furnace, hot water tanks, and air conditioning), and in the case of our client’s 1912 character home, they wanted to know more about when the plumbing and electrical was upgraded and brought up to modern standard. The client was fortunate that she knew when all of the upgrades took place – in some cases, a guess or a search of permits may be required.
Appraisers use a checklist and go through each room one by one, making notes, including any deficiencies or repairs required. They aren’t able to verbally provide an estimated value at the end of this visit, because they need to make calculations based on their findings, and need to incorporate the other part of their appraisal before they can give a value: comparables.
An appraiser will usually look for 3 or 4 (and potentially up to 10) comparable properties that have been recently sold in the area. These might not be exactly the same size, condition, or age, but they do give an appraiser a good idea of what is selling close by. In our client’s scenario, the appraiser found a house of approximately the same size and condition as hers, two blocks over, but it was about 50 years newer. If her property was the same relative size and had been maintained to the same level as that of a home 50 years newer, this meant her home was well maintained and upgraded, which speaks positively to the value of her home.
According the the Appraisal Institute of Canada, upgraded kitchens and bathrooms, flooring, windows, doors, and even paint are all good options to consider as renovations and improvements that increase the market value of a home. Check out their consumer guide here.
For our client with her 1912 home, she was very pleased to get the results of the appraisal. Her hard work and attention to detail on upgrades that made her home very comfortable to live in were also the types of upgrades appraisers look for, and the value of her property increased to where she was hoping it would be for her refinance.