House Appraisal for Refinance

[lavenderblue]

I just got divorced and am refinancing my house to pay my ex his buy-out. We purchased the house in 2015 and since then have remodeled the entire first floor and updated the second floor. When the appraiser comes in, do they care about stuff like that? I see what my house is valued at on sites like Zillow and Realtor.com, but I don't fully understand where those numbers are coming from, and from what I've read they tend to be on the high side. But are they on the high side of what condition my house was in when I purchased it? Do these sites somehow know that I've remodeled/updated? Do I tell the appraiser about the upgrades? I have a break even number that I need the house to appraise for and I'm super nervous that it won't appraise for that amount. 

[pumpkincat]

Absolutely tell them about the remodeling! They will take it into account.
Zillow, etc are using comparable homes in your neighborhood (and i'm sure some sort of additional modeling) to come up with an estimate. Actual appraisal estimates in my experience are usually lower, but to your point, the sites don't know about the added value of your remodeling efforts.

Good luck!

[Susie]

Zillow, Redfin, etc. won't account for your renovations in the value they suggest.  We've added a whole house generator, replaced every window and exterior door, replaced all wall to wall carpet with HW floors, and made a number of other major investment/system level upgrades to our house since we bought in 2021, but the value that is shown on those sites just floats with the neighborhood and local sales.  

As far as the upgrades, I haven't found appraisals to be super sensitive to interior refreshes and upgrading materials, like laminate to granite counters, hollow interior doors to solid, etc.  They matter more if you're actually selling to buyers.  Anecdotally it seems like really nicely updated houses with pretty finishes are more likely to end up in a situation where the house doesn't quite appraise for what a buyer offered.  But YMMV.

You should see a nice appreciation since a 2015 purchase though, and hopefully that will be enough for you, with a possible boost from the updates.  It will vary by area of course, but that's long enough, and rising home values since 2015 have been widespread enough, that it's a good bet. I see it even just since 2021. I still watch the RE market closely in my area, and I have a pretty good idea what homes like mine (both as it was in 2021, and as it is now) would sell for.

If you are nervous, I'd consider rounding up some RE listings of comparable homes to yours that have sale prices in the ballpark you are looking for, and have those at the ready for the appraiser.  Ideally you want recent (last few months) closed sales, vs. offered for sale.  

[mainelyfoolish]

I work in mass appraisal (tax assessing) which is a different job from someone who appraises individual properties, but I can tell you that for assessing purposes, only some upgrades will add value by themselves. Changing rolled vinyl floors to hardwood would add value; removing 1990s wallpaper borders or replacing a powder blue toilet would not add value. However, in aggregate, cosmetic renovations can increase the value of your house if it makes the condition of the house better than similarly aged homes. A 30 year old house that has never had anything replaced would probably have average depreciation from the cost of a new replacement, whereas the same house with cosmetic updates throughout might be rated as having less depreciation and therefore a higher value.

[lavenderblue]

Thank you everyone! Just wanted to update that my appraisal came back and it appraised for $20K above what I needed, so I am very, very happy.