Difference between home value and appraisal value

Why doesn’t my appraisal show that my house is worth more than the dump down the street.

When you buy or refinance a Metro Detroit Michigan home and get a Michigan mortgage you are usually required to pay for a mortgage.  The lender wants to know whether the collateral (the home your are buying) is worth loaning against.

But an appraisal doesn’t really cover the little things.  An appraiser doesn’t care if the house is freshly painted, or has new carpet, or a new roof.  The appraiser does not care about all the little touches and upgrades you put into your Metro Detroit Home.

Don’t believe many of those things like tile, cement block windows, or built in bar, or  type of counter tops really add appraisal value.  Sure it adds to homeowner value in terms of buyers and sellers value.  But to a bank and appraiser little updates like garage organizers add little or no value.  The additions and subtractions on an appraisers sheet are usually things like sq footage, number of bathrooms, bedrooms, how many car garage, finished or unfinished basement, quality of construction, condition, actual age, heating/cooling, porch/patio/deck, energy efficiency items, functional utility.

Appraisers will compare your house to another Metro Detroit house  within a square mile that has sold within the last six months.  Sure that one might be a four bedroom and one car garage where your Michigan home is a three bedroom and two car garage.  The appraiser does additions and subtractions to make the homes equal. So he can figure out the estimated value of the home based on recent sold homes that are similar in style and are in the general area.

Now days if an appraiser would state that this house is worth more because it has tile over carpet or new paint versus a house that needs paint will raise scrunity with lenders.  They will give value additions to a very superior house will lots of updates but one room with crown molding most likely won’t make the appraiser additions and subtractions.

That is why your Metro Detroit home may appraise for the same amount as the dump down the street that just sold.  They may both have 3 bedrooms, 1700 sq ft, 2 car garages, finished basement.  It is hard for an appraiser to justify a huge value difference on little upgrades.

Sure your Metro Detroit Michigan home will sell quicker and for more money but appraisal wise they look at the big items.  For more on Michigan mortgages or Metro Detroit Michigan home buyers tips go to the categories on the side.

My little laugh of the day is:

A little old lady that was 104 years old was asked by a reporter what she liked best about being 104 years old.   She replied “no peer pressure”.


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