Real Estate News
Jun 14, 2013
By: Credit.com
Property values have come roaring back. Many can now
refinance their loans by virtue of having additional home equity. And increased
property values can also put homeowners in a better financial position to sell
their home without entering short sale territory. But the fact remains:
Everyone wants to attain maximum value for their real estate and home repairs
can help.
So what’s the best barometer of a home’s true worth? Simple:
the amount a ready, willing and able buyer is willing to pay at any given point
in time. Unfortunately, appraisal estimates can be skewed, especially when not
all the home repairs and improvements are taken into consideration. This is why
you should weigh all home improvement decisions carefully before you commit.
When You’re Refinancing
Unlike in years past, the weight of an appraisal to
determine the home value for the purposes of refinancing a mortgage is based
upon the facts (which are primarily based on other homes that have sold) and
what the property description is.
Improvements that may help a refinance valuation:
◾Additional bedroom or bathroom
◾Addition to the lot size
◾Addition to the garage
◾Improvement that expands the “use” of the home
When it comes to improvements such as landscaping, painting,
any home improvement more “cosmetic” in nature, realize that the primary
benefit is for the enjoyment of the property, not for trying to influence
value.
When Selling
A home buyer is going to take into consideration all of the
facts associated with the property, location, lot size, square footage,
bedrooms and bathrooms, as well as additional cosmetic improvements that have
been done that add to the look and feel of the home.
Improvements that may help a sale price:
◾New paint job
◾Freshly maintained landscaping
◾Remodeled and/or upgraded interior
◾Deck and/or patio addition
◾Additional bedroom or bathroom
◾Addition to the lot size
◾Addition to the garage
What’s the Biggest Bang for Your Buck?
These include the high-ticket items that increase square
footage. An additional bedroom or an additional bathroom increases the square
footage, which in turn allows an appraiser to make higher adjustments when
determining valuation against other comparable homes around the subject
property.
Refinancing
Let’s say you have funds
ready for possibly improving your home for long-term enjoyment. Instead of
using the funds to make home improvements in an attempt to enjoy your home
more, you might actually see a greater benefit if you used that money toward a
refinance. Over time, the money you save from refinancing could then be put
toward those home improvements down the road.
Selling in the Near Future
Typically, you won’t get a dollar-for-dollar recapture on
the home improvement cost, even when selling. Because the weight is given to
improvements that expand the use of the house (i.e. bedroom, bathrooms, etc.),
it’s more common to expect 20 cents on the dollar, or maybe 30 cents on the
dollar, depending on the improvement in such a scenario. Because the market is
the strongest indicator of price, the market will dictate sales price followed
by additional improvements and subsequent marketing of the home.
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