Deferred or neglected maintenance. Deferred or neglected maintenance is the fastest way to watch your house depreciate. A small drip from your water heater might not seem like a big deal until it leaks into your foundation and causes it to crack.
Other times, your home's value can be reduced by things out of your control, such as messy neighbors, nearby foreclosures, power lines, natural disasters, your local real estate market, or the overall economy.
An appraisal may come in lower than you expected because property values dropped or because you've overestimated your home's market value.
The value of a home relies in part on its condition. If your home falls into disrepair, its value will decline. Make sure you maintain your home, make repairs as soon as there is an issue, and even make improvements when you can.
Physical aspects of the property, such as poor curb appeal due to yard maintenance or unattractive paint jobs, as well as interior aesthetics like outdated kitchens and bathrooms, can also decrease a home's value.
Having outdated appliances, plumbing, electrical, and HVAC systems could decrease the value of your property. Dated features in your home's interior could imply that the property has not been well-maintained, which could raise concerns about any underlying issues.
Appraisers are trained to overlook clutter. Stray clothes, scattered toys, unwashed dishes, unmade beds, disorganized closets, and other items that suggest you actually live in your house should not affect an appraisal if they don't affect its structural integrity.
Top Home Improvements to Boost Property Value
Revamping your kitchen with sleek new appliances, crisp countertops, and stylish cabinets can net a whopping 102% return on investment when you sell your home, the National Association of Realtors reveals.
Crime Rates. Safety is a huge concern for homeowners. High crime rates in a neighborhood can lead to decreased property value as potential buyers and tenants seek safer alternatives.
However, after 30 years, the depreciation rate increases significantly when the age is measured with the effective age. For a property built more than 30 years ago with an effective age of 1 year, its value will increase over a few years and decrease around an effective age of 15.
Don't expect a dollar-for-dollar return
However, big-ticket items, such as pools, major kitchen and bath remodels and extensive landscaping undertaken for the sole reason of adding value might not bring the return you hoped for.
An appraiser will likely look in your closet to measure it to determine how big is it as larger closets and home with more square footage are more valuable. The appraiser will not assess the cleanliness of your closet.
Damage, incomplete repairs, and deferred maintenance can reduce your home's value. The appraiser deducts estimated costs of these repairs, affecting the appraisal amount. Outdated or non-functional features. An older home with outdated decor, appliances, or layouts may receive a lower value in its appraisal.
Real estate experts estimate between 10-20% of appraisals come in lower than the sale price. But in today's competitive housing market, more homes are selling with multiple offers and the chances of an appraisal gap is increasing. When there is an appraisal gap you have five options. Renegotiate the deal.
Your lender will reject your refinance request if the appraiser gives your house a market value that is too low. An appraiser will evaluate the interior and exterior of your home to determine its market worth. In turn, this includes a tour of your entire home, including your bedrooms.
Typically, landscaping adds about 5.5% to 12.7% to a home's appraisal.
For an appraisal, age and design of a home are less important than how well it measures up to other homes. Appraisers attempt to compare a home to other homes that are as similar as possible in design, size and age, and then other factors come into consideration, including upkeep and upgrades.
Homes are valued and priced by the livable square feet they contain, and the more livable square feet, the better, says Benjamin Ross, a Realtor and real estate investor based in Corpus Christi, Texas. Adding a bathroom, a great room or another needed space to a home can increase function and add value.
Know the two hot spots
The rooms buyers most closely inspect (and judge) in a house are the kitchen and master bath. These are the interior spaces where the most value can be added during a sale, so they need to look their best.