By Alison Rogers @MoneyAugust 9, 2012: 9:36 AM ET
NEW YORK (Money Magazine) — When it comes to assessing a home’s value, real estate agents and homeowners tend to be an optimistic bunch.
In the post-bust world, appraisers are a different story. They have to predict a realistic value for your home that the bank can use to extend credit to a borrower — and that number can make or break your sale or refinance.
Appraisers say the following five areas are where homeowners often misjudge the worth of their abode.
1. The outside
The appraiser sees: Overgrown bushes and chipped paint.
What he does: Slices as much as 3% off the value of an average-size home.
Why: Curb appeal is primo. And an unkempt yard is a sign that there may be other issues.
“A good-looking lawn and bushes imply that you also take care of the internal systems in the house,” says Jonathan Miller, president and CEO of a New York City-based appraisal firm that works throughout the tri-state area.
Moreover, the more meticulous your neighbors are about grooming, the more your appraiser will downgrade the value of your home.
“If a lot of the nearby properties are professionally maintained, the one that sticks out like a sore thumb will get a harder adjustment than in a subdivision where there’s more variation,” says San Diego appraiser Armando Ortiz.
Commentary from Bob Karp of Karp Properties LLC: We all think buyers are driving the current real estate market. Not true. It’s the appraisers. No matter what the seller thinks, the realtors or the buyer – the final word is the appraiser’s. And it is often quite a shock to all parties involved. My personal experience selling my own home is a good example. I had a wonderful seven year old 3,200 sq. ft. home in a very desirable gated community in Herford, Arizona. The VA appraisal came in $3,000 under the agreed-upon purchase price. Not much? Yes – but I was curious why it was lower than what I already thought was a very low price. Reviewing the appraisal I was stunned to find that the 17 X 45′ swimming pool, decking. 200 feet of block walls and $60,000 of landscaping on a half acre of my 4 acre lot was valued at $18,000. That low appraisal could have killed the deal. It didn’t – but be warned – appraisers are the gatekeepers to sales.