The Appraiser: Your Key to Safe Home Investing

Whether you’re thinking about modernizing a room in your home or rehabbing an entire house, you’ll want to make sure the money you invest in the project has a positive effect on your home’s value. Before you start tearing up tile, ripping out old plaster or buying that “handyman’s special” you’ve had your eye on, you should consult a professional real estate appraiser about the economics of your proposed project.

You will receive good advice on questions such as:

• Is the improvement feasible and marketable?
• Are neighborhood trends pointing to an upward cycle?
• How to go about it?

Other reasons for an appraisal and/or market analysis related to a rehab property include

• To evaluate insurance needs
• To estimate real estate taxes after rehabilitation
• To provide fair market rents and cash flow analysis

As investors, you’ll also want to review the information and reasons to utilize a professional appraiser in our buyer and seller sections of this website.

Keep the Next Buyer in Mind

When it comes to improving your home, don’t count on a dollar-for-dollar return on every improvement. For example, real estate appraisers have found that remodeling a kitchen or bathroom or adding a room may bring the greatest return on a homeowner’s investment. Some custom installations can actually detract from value, which appraisers call “overimprovements.”

• Make sure essential repairs are completed before you start improving—a posh sauna won’t make up for a leaky roof. In fact, simple and relatively inexpensive repairs such as plastering and painting could earn a better return on your investment than some major improvement projects.
• When deciding what to improve first, take a look around and find out what other homebuyers want. That way, you’ll select those improvements for which
  the market is willing to pay. Beware of overimproving!
• If you do it yourself, do it right. Keep your improvements consistent with the quality of your home and the character of the neighborhood. If you decide that you can’t do the job yourself, be sure to contact a reputable contractor.
• Pay a fair price for improvements, not an inflated price.
• Consider energy-efficient improvements. While they may not save you a great deal of money now, as energy costs increase, so will your savings.
• Obtain any necessary permits to make sure your improvements are legal. Illegal improvements might not add value.

The key to all major home improvement projects is sound advice. Calling a professional real estate appraiser can start you off on the right foot. Based on their experience and proven ability in the analysis and valuation of real property, appraisers can advise you on the chance your remodeling investment may pay off in the long run.

Is Rehab Feasible?

If you’ve been bitten by the rehab “bug,” you’d better get help or the “disease” could be financially fatal. You need to know if the property is worth rehabbing, if the neighborhood is on an upward swing, how much the rehab will cost and what its “after-rehab” value will be. What you need are the services of a real estate appraiser to conduct a feasibility study. While many people may think of real estate appraisers only in conjunction with mortgage loans, professional appraisers perform a wide range of additional services Renovation studies are based on certain economic principles, including the principles of contribution, increasing and decreasing returns, conformity, and highest and best use. The appraiser explores the alternatives, estimates the cost and potential income/value benefits and, guided by the results of a comparison of the data, develops an estimate of value before and after rehabilitation. A before-and-after feasibility analysis performed by a professional appraiser can enable you to make a reasonable decision about that potential rehab property. You want to do it; be sure to do it “smart.”

Neighborhood Finance Corporation

NFC provides unique lending programs and related services to help revitalize targeted neighborhoods in Polk County, Iowa through partnerships with residents, government bodies, community-based organizations and the business community.

Is your home in a designated area to qualify for $10,000 of buyer forgivable funds to complete improvements to the property? If so, it could be a real benefit to know the ins and outs of the program before you start a major renovation project.

Des Moines Real Estate Services has over 12 years of valuation experience working with NFC and we are very knowledgeable with their lending areas and home improvement program.

The Value of A Good Appraiser

Whatever the reason that calls for a value estimate of your home, you should engage the services of a member of the Appraisal Institute. These professionals meet stringent ethics requirements that surpass those required for state certification. Reflecting their unbiased and objective approach to real property appraisal and analysis, members of the Appraisal Institute are required to adhere to a strictly enforced Code of Professional Ethics and Standards of Professional Appraisal Practice.

Honest and Personalized Service

As professional real estate appraiser and member of the Appraisal Institute, Betsy Pokorny is committed to delivering value and professionalism that will help you determine the appropriate report or service for your individual situation. Professional market analysis and experience is key in providing useful information to increase your profit. Contact us today so we can help you put more money in your pocket.

Source: Appraisal Institute