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Learn How to Increase the Bank Appraisal of Your Home

written by: sherisaid•edited by: Donna Cosmato•updated: 7/19/2010

Preparing a home for sale is a different proposition than preparing for a bank assessment prior to a refinance or second mortgage. Make sure you know what upgrades affect the worth of your home before you climb into your overalls and start slapping paint on the walls.

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    The purpose of a bank appraisal

    In order to sell your house, you want to increase its curb appeal, which is largely cosmetic. The cleaner and more inviting a home looks, the more likely a prospective home buyer is to stop and take a look, and ultimately, to buy. But bank appraisals have a different purpose and require a different approach. Banks are looking to protect their investment - the money they are lending you to purchase the house with collateral - the house itself. So the aim of the assessment is ensuring the property is maintained well and not in danger of rotting off its foundations.

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    Ways to increase the value of your home

    One way to increase the overall bank appraisal value of homes is by adding square footage to living spaces. This may be accomplished by finishing an attic or basement, building an addition, or converting a garage or porch. Unlike a fresh paint job, added living space to homes is a saleable feature the bank can market if they must repossess the house in the future. While building an addition onto a house can be costly, if living space is increased by finishing existing spaces, for example, building an office in the basement or an additional bedroom in the attic, the return on a meager investment can be impressive.

    Another area of improvement to consider is the overall condition of the house. Inspect the roof, the pipes, the electrical systems, and the structure for defects and damage, and then make the appropriate repairs. Replace dry rotted wood trim, and fill cracks in the driveway.

    Some cosmetic upgrades, like quality hardwood or stone flooring, may make a difference, because these tend to retain their value, unlike cheap carpeting, which shows wear in just a few years. Whatever cosmetic repairs you make, be sure they fit with the overall style of the house, and wherever possible choose a neutral color pallet. Loudly patterned stone flooring can be a hard sell.

    Other things commonly used as upgrades, like the addition of an inground pool, may actually decrease the value of the home, so do some research before making that kind of change. If you want to put in a pool, it may be best do it after your loan or refinance has been approved.

    Remember, curb appeal is the watchword to make houses more saleable, but if you're looking to refinance your mortgage, the lender wants to see whether the house – and with it their investment – is whole and commercially viable. Spending a little money to increase the bank appraisal value of homes has several rewards: more value for your home, which means more money in your pocket, a better chance of loan approval, and a nicer place to live.