4. Appraisal Booster Home Remodeling Projects
Ahhh, appraisals. The bottom line is that banks and real estate transactions all use appraisers. And appraisers use what are called “comps” or comparables. Those are similar homes in the area that sold for a certain price and then that is used to determine the market value of your home. Appraisers have certain things they look for as key determinants of value. For example, the location of the real estate (location, location, location!), the livable SF of a home, the number of bedrooms and bathrooms, if it has a fireplace, what the home is constructed out of, etc.
What don't they care about? Well, they don’t care what color your living room is or what brand of kitchen appliance you have. What you want to focus on with appraisal booster projects are high ROI projects that improve the appraisal value and comps such as major remodels or renovation projects like Bath and Bedroom additions.
Typically these will include projects that will increase livable area or core appraisal metrics such as numbers of bedrooms and bathrooms. The reason Basement remodeling does not historically provide a good return is that although you can use the area, it typically does not count as additional living area from an appraisal standpoint.
CAUTION: This does not mean to over-improve. Adding a 5th bedroom in a neighborhood of 3 Bedroom homes will not provide any significant return. Appraisal booster projects need to be done in the context of neighnorhood norms.
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