affect of ongoing projects on home appraisal?

masraum · 08-27-2022, 08:37 AM

We are considering getting a home equity loan to fund some improvements to our home. We just bought the home in the last 2 years, but the value has gone up and based on comps, it seems like we could get some equity out. The question that we have is if we are in the middle of several projects that have the house in some disarray (don't get me started on starting multiple projects at the same time) how would the projects and disarray impact an appraisal?

In my experience, most appraisals have been drive bys, but I assume they've probably used photos from realtors as well, but since our home is not currently for sale, they could see photos from when we bought it, but not current.

Dantilla · 08-27-2022, 08:45 AM

A friend went through this a few years ago.
Finishing off the basement, adding laundry and a bathroom.
While it looked completely finished, the water line had not been hooked up.
Appraiser said it is not a functioning bathroom, therefore adds zero to the value.
From his perspective, it's as if the new bathroom doesn't exist at all.

Hope you have a better experience

masraum · 08-27-2022, 08:57 AM

Thanks for the data point. That's kind of what I would have expected.

look 171 · 08-27-2022, 11:24 AM

Try to finish them. They don't like unfinished or ongoing projects. The way lenders see it is that if it never gets done, the home will lose value upon sale so they are more reluctant to fund the loan. Talk to your lending officer, sometime they will make suggestions on the amount of construction or remodel completed to a certain stage and they will see it as good enough for the loan. Ask me how I know. I had to fight tooth and nail on a couple of our rentals.

RANDY P · RANDY P's Garage

As long as the home/room looks complete when you take a photo......

PS Never try to add footage or rooms without permits. Then the appraiser will dock you for the cost it takes to put it back into compliance.

rjp

NYNick · NYNick's Garage

Put yourself in the appraisers shoes. Ever go to a cocktail party where the couple has unfinished projects here and there with tools lying around? Or the guy has 2 cars disassembled in the garage?

People like to see (and lend on) finished and beautiful. Not hopes and dreams.

john70t · 08-27-2022, 11:50 AM

Quote:

Originally Posted by masraum

In my experience, most appraisals have been drive bys,

Private or bank?
You can be reassured the latter will go through everything with a fine toothed comb.
The first can be paid cash and disappear tomorrow. Depending on how much they value their license.

Do you want high or low? Don't answer that.
There is a bit of gray area in that particular science. Factors can be adjusted in many ways.

Adding sq footage and bathrooms will probably trip a city/state re-assessment for taxation.

masraum · 08-27-2022, 12:39 PM

Thanks all. That's what I expected.

Bill Douglas · 08-27-2022, 10:47 PM

My thoughts are, if you have a reasonably good relationship with a real estate agent you could ask them first what it's worth. They tend to be very up to date with what prices are in their area. and are free. Then, if you like what they are saying, get a paid appraisal from someone they recommend.

id10t · 08-28-2022, 02:53 PM

Just refinanced via my local credit union a few months ago, "online value assessment". IE, they look it up on zillow etc. Caused some confusion - they thought I had a single wide trailer, right address totally wrong picture. Had to send a pic of the front of the house.

masraum · 08-28-2022, 03:00 PM

Quote:

Originally Posted by Bill Douglas

My thoughts are, if you have a reasonably good relationship with a real estate agent you could ask them first what it's worth. They tend to be very up to date with what prices are in their area. and are free. Then, if you like what they are saying, get a paid appraisal from someone they recommend.

Yeah, we've done that. Of course her thoughts, not having come to the house, are probably based on her knowledge from the house from when we bought it and based on the updates that are in progress being completed.

Quote:

Originally Posted by id10t

Just refinanced via my local credit union a few months ago, "online value assessment". IE, they look it up on zillow etc. Caused some confusion - they thought I had a single wide trailer, right address totally wrong picture. Had to send a pic of the front of the house.

Interesting. Thanks