What to Do (and Not Do) Preparing for a Home Appraisal

Fire pit in backyard

Knowing what to expect during a home appraisal can make the process as smooth and efficient as possible for both the homeowner and the appraiser. If you’ve never experienced an appraisal before, it’s perfectly reasonable to have questions. For instance… 

How much time should an appraisal take?

The time the appraisal will take depends on the size and condition of the home, but most are brief and should take between 10 and 30 minutes. Remember, an appraisal is not a home inspection, and won’t be nearly as detailed. 

What does the appraiser look for? 

Many appraisers use the Uniform Residential Appraiser Report. Here’s what the appraiser will look for to fill it out:

  1. The appraiser may start (or finish) with the outside of your home. They’ll walk around the entire exterior of your house, looking at your roof, foundation, window screens, gutters, yard and landscaping. They’ll note whether you have access to public utilities, the neighborhood, the size of your lot, and whether or not you have a driveway.
  1. Once the appraiser is inside your home, they’ll walk through each room to assess the condition of each, possibly take measurements, and evaluate the general layout, ensuring the total number of bedrooms, bathrooms and square footage is as expected. They may take pictures and note any needed repairs. 

“An appraiser may ask the homeowner questions, like When was the last time you had any maintenance done? When did you remodel the kitchen?” says home appraisal expert Len Fishman. “They’ll get the history of the structure, the windows, the roof. It’s helpful for the homeowner to have a list ready of what work’s been done and the year it was completed.”

  1. They may look at appliances and necessities like your HVAC, electrical outlets, and smoke detectors. They may also note the material used for the walls and floors, and check for safety features like handrails on stairs.
  1. If you have a garage, basement, or attic, the appraiser may look at these areas, too.
  1. Once the appraiser leaves your home, it may take up to 10 days to receive your report, as they may need to verify information and write up their findings, though most reports are completed in five days or less. 

What should the appraisal cost? 

The cost of an appraisal will depend on many factors, including why the appraisal is being conducted, the location, and the size of the property being appraised. The average cost of a single-family home appraisal can vary drastically depending upon the region. For example, you can expect to pay around $450 in Iowa versus $875 in Montana when requesting an appraisal through the U.S. Department of Veterans Affairs. (USVA)   

Download our Appraisal Guide

Never experienced a home appraisal and are unsure what to do? Hometap spoke with Fishman to talk best practices, biggest frustrations, and advice for homeowners to ensure the process is as seamless and efficient as possible. 

Dos and don’ts of preparing for a home appraisal 

DO make the appointment with enough advance notice to do any necessary tidying. It’s common to schedule the appraisal a week in advance. The appraiser will likely inform you on the call what they’ll need access to so that you can make sure sheds, attics, basements, and so on are cleared. The house should be as clean and accessible as it would be for an open house. 

DO have a list ready of all the maintenance that has been done and when, including things like when the roof was last replaced or repaired, when appliances were purchased, etc. This will help make the appraiser’s job a bit easier and won’t put you on the spot. 

DON’T talk costs. While you may be proud of the Viking range in your kitchen or the premium garage doors you had installed, appraisers won’t be looking for you to include costs with your list of updates.  

“You don’t need to include the cost of purchases or repairs,” says Fishman. “The appraiser will form their own opinion based on their expertise and experience. It’s their job to be as objective as possible.” 

DON’T try to sway the appraiser. While it’s great for your own information to know what’s happening in your neighborhood, don’t come prepared to give the appraiser a history of the neighborhood or nearby comps. 

“Homeowners will often tell the appraiser about the house down the street that just sold for such and such. The appraiser is going to do their research, and will likely disregard the information you provide to avoid creating an anchor bias,” explains Fishman.

Setting your expectations and preparing for your home appraisal appointment will help ensure the appointment runs smoothly and provides the most accurate home value estimate by your appraiser, whether it’s the first step in the process for putting your house on the market, or preparing for financing like a Hometap home equity investment.  

YOU SHOULD KNOW…

We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

How to Tell If You Got a Good Homeowner’s Insurance Rate

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Last updated March 29, 2022

The number of home insurance options on the market is overwhelming. How do you decide on the best policy for you, how to get the best homeowners insurance rate, and what do you do if you’re not getting the best rate on your current policy?

Whether you’re in the market for new homeowners insurance or your current insurance policy is up for renewal, here are four questions to answer to find the homeowners insurance policy that works best for you.

Do You Have the Right Amount of Insurance?

First, you want to check that you’re not over—or under—insured. Overinsured generally means overpaying. But if you’re underinsured, a minor accident could end up costing you thousands.

Start by checking your home’s current value on realty sites to get an accurate baseline of its worth. See if your estimate of your personal items inside your home is still accurate. In an interview with the National Association of Realtors, Lisa Lobo, vice president of underwriting operations at The Hartford, revealed that most insurance policies don’t include replacement cost coverage. Instead, you’ll get the actual cash value of contents, which accounts for depreciation.

Check to see what’s covered by your policy and what isn’t. If you have valuables such as jewelry or art, you’ll want to purchase an endorsement, which is essentially an addition to your existing insurance contract.

How Much Does Homeowners Insurance Cost?

Much like your health insurance, your homeowner’s insurance may have specialty deductibles. This is the out-of-pocket amount you are responsible for covering before your insurance policy starts to pay. As Policy Genius explains, if you have a $1,000 deductible and your home sustains $50,000 in insured damage, insurance will pay you $49,000 after you pay a deductible. On average, the annual homeowner’s insurance premium is $1,765. Before you balk at a high deductible, Esurance notes that it isn’t always a bad thing. Having a higher deductible may lower your monthly payments by as much as 20%. Of course, you’ll want to weigh the cost savings against the likelihood of having to pay for significant damages.

What is the Best Homeowners Insurance?

Consumer Reports says the best way to determine if you’ll be satisfied with your insurance is to know how an insurer handles damage estimates.

Do your research: Read customer reviews and see if customers felt their damage estimates and final settlements were too small. This may be reason enough to avoid an insurer.

Using ratings from J.D. Power as well as data from the National Association of Insurance Companies, NerdWallet ranked the best homeowners insurance companies.

Do I Qualify for Any Discounts?

To make sure you’re getting the best deal possible on your homeowners insurance, you’ll want to check and see whether your home makes you eligible for any discounts. Here are some of the most common ones:

  • New construction
  • New home (typically discounts for 10 years old or less or five years old or less)
  • Utility upgrades (electrical, plumbing, heating)
  • Fire resistant or superior construction
  • Roof upgrades
  • Insurance company loyalty (10 years or more)
  • Advance purchase
  • Home and car insurance bundle

Should You Make the Switch?

Any time you can lower your rate and improve your coverage, you want to consider switching your homeowners insurance.

You’ll also want to determine if your needs have changed. For example, if there’s an increase in sinkholes in your area and your current provider doesn’t offer sinkhole coverage, you may find a better deal switching to a provider that can cover all your needs. Just remember: If you switch providers, cancel your insurance with your old provider! Allstate recommends calling your previous insurance to make sure the cancellation date is on or after your new policy, that you get a confirmation that your policy won’t automatically be renewed and find out if you’re entitled to a refund. 

Even with the broadest insurance policy, not everything can be covered. For example, flood insurance and earthquake insurance are available separately, and in states where hurricanes are typical, homeowners might also need to look into additional coverage for windstorm insurance.

In an event where you have an immediate financial need not covered by your homeowner’s insurance, your home equity could help. Hometap offers a smart way to tap into your home’s equity to fund expected – and unexpected – life events like home improvements and education costs, with no interest or monthly payments. 

Take our 5-minute quiz to see if a home equity investment is a good fit for you.

YOU SHOULD KNOW…

We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

10 Things You Should Know About Accessory Dwelling Units

Furnished bedroom

Accessory Dwelling Units (ADUs) are not a new concept, although the acronym may be unfamiliar. Also referred to as granny flats, tiny homes, in-law suite, casitas, pool homes, and guesthouses, these creative spaces have grown in popularity across the U.S., in particular in areas like California where recent laws are creating greater incentives for homeowners and developers to build.

An Accessory Dwelling Unit (ADU) is an attached or detached second house or apartment on a single-family lot.

A Junior Accessory Dwelling Unit (JADU) refers to the conversion of a bedroom within a single-family home into an independent living space. 

ADUs have many benefits, for both the homeowner and those seeking rentals. Although some state laws favor ADUs, homeowners should do their homework before leaping into an investment in a second home, as not every city in every state allows them, and the regulations are often changing. Parts of California, Massachusetts, Maine, Arizona, Vermont, Washington, Georgia, and Florida allow them currently. Here are 10 things you should know about ADUs.

  1. What are the benefits of an ADU for homeowners?

There are many advantages to ADUs for homeowners. If you plan to stay in your home for a long time, the additional income of an ADU can help offset your expenses, support your retirement, and pay off debts. Many homeowners use ADUs to keep family members close, whether they’re elderly parents or children just starting out on their own. In addition, for California residents in particular, ADUs are seen as instrumental in addressing the state’s housing and affordability crisis. 

  1. How many ADUs can you have on a single property?

This can vary by state.  For example, as of January 2020, California law stipulates that a single property may have two ADUs: a full ADU and one JADU.

Be sure to check your city laws as well though, as they may have other stipulations to take into account.

  1. How large is an ADU?

ADUs are typically under 1,000 square feet but in Los Angeles County, for example, these small structures can be up to 1,200 square feet. One to two bedrooms can easily be accommodated. Size will also vary from one city or town to the next. 

  1. Does an ADU have a separate postal address?

Typically, an ADU will share a postal address with the main residence. Rules may differ by county, however, depending on the ADU’s street access. You can request a separate mailing address by following the proper channels in your county. In Los Angeles, for example, the Mapping and Property Management Division processes these inquiries.  

Tiny home interiors and exteriors

  1. How much does an ADU cost to build?

On average, an ADU costs $156,000, according to the Terner Center at UC Berkeley. But DIY homeowners can build an ADU on their property for as little as $50,000. Of course the cost will depend on other factors including materials and size. 

If you’re converting a garage or basement, costs may be even lower. Rental ADUs can pay for themselves within seven to 10 years depending on what you’re able to charge for rent and the cost of building the unit.

  1. What other costs are involved in owning an ADU?

As with your primary home, there are other costs to consider in becoming a landlord. You should factor in building costs, which include permits and fees, hiring a contractor and architect, and an inspector. 

Some cities that aren’t quite as keen on the tiny home trend charge upward of $50,000 in what they call “impact fees” which can include utility costs, school fees, and park fees, to dissuade homeowners from building these units on their properties. 

Once your rental is ready, other costs to consider include gas and electric, water, insurance, and regular upkeep. Take the time to make sure you’re financially prepared to manage and maintain an ADU on a long-term basis.

Read more: Are you Financially Prepared to Buy a Second Home? »

  1. Does an ADU impact taxes?

This is dependent on your city and state, and may impact your property taxes. However, your taxes will increase based on the value of the ADU. Check with your county’s Office of the Assessor for guidance.

If you’re renting your ADU, you’ll need to pay taxes on the rental income you earn. If the ADU is on your residential property, you may be able to deduct a certain percentage of the upkeep costs.

  1. What financing options are available for ADUs?

Once you have a handle on what it may cost to build and maintain your ADU, it’s time to explore your financing options. 

Read More: 4 Ways to Finance Your In-Law Suite Home Addition »

4 Ways to Fund an ADU 

Home Equity Loans: These loans offer a large cash amount that can be used to pay for construction with a fixed or variable interest rate. 

Home Equity Lines of Credit (HELOC): Similar to credit cards, HELOCs have preset limits. You can draw (or borrow) as much or as little as you need and pay it back with interest and principal in regular installments.

Reverse Mortgages: For those 62 and older, you can borrow against your home equity without monthly fees. However, the loan must be repaid as soon as the borrower dies or moves.

Home Equity Investment: This debt-free option enables you to tap into your home’s equity in exchange for a minority stake investment in the home. A home equity investment, like those offered by Hometap, can provide up to 30% of your home’s value in cash in exchange for a share of the future value of your home. 

Read how one L.A. Homeowner Used a Hometap Investment to Build an ADU »

  1. What best practices do successful landlords follow?

Becoming a landlord is akin to running a business. You should expect to have increased demands on your time, attention, and wallet. Owning a rental property is not a “set it and forget it” venture. From tenant screening to electronic payments, setting appropriate rents to inspections, there are myriad details to manage. Seek professional guidance where you can and set limits on your “office hours” so your rental business doesn’t run you.

  1. Are states supporting ADU construction?

That varies from state to state, but we’re starting to see some legislative changes taking place in different cities across the U.S. In addition to a host of new ADU laws favoring construction, California has assembled guidance for interested homeowners. The approval process, for example, has been expedited so interested parties can get started right away. Your city and county may also have its own rules that you’ll want to familiarize yourself with.

ADUs are an innovative approach to state housing challenges while providing an additional source of income to homeowners. California has enacted a series of laws to reduce the barriers to entry for homeowners considering an ADU, and we may see other states facing similar housing demand issues following their lead. Debt-free financing options like Hometap’s can provide the capital to build these creative spaces on your existing land, without the stress of typical loan payments. 

Take our 5-minute quiz to see if a home equity investment could help fund your ADU.

LEGAL DISCLAIMER

The opinions expressed in this post are for informational purposes only. To determine the best financing for your personal circumstances and goals, consult with a licensed advisor.  All links are provided for information purposes and should not be relied upon for legal advice or guidance.

Virtual Volunteering: Hometap Joins Forces with Heading Home

Hometap has teamed up with Heading Home – a non-profit organization that is on a mission to end homelessness in the Greater Boston area. Heading Home believes that a stable home provides the beginning foundation to help someone get back on track and on the pathway towards self-sufficiency and for the past two summers, Hometap has partnered with them through the Up & Out Program. With Headings Home’s unique approach and compassionate care, individuals are best positioned to receive and stay in housing. While volunteering this year looked different due to social distancing guidelines, Heading Home still found a way for all of us to come together virtually and roll up our sleeves to help.

 

 

With daycares, public parks, and camps off-limits this summer, Hometap wanted to join in creating activities kits for those who are most vulnerable during the pandemic and to help them to feel supported and cared for as they work hard towards their ultimate goal, homeownership. Despite being remote, the Hometap team got creative building a variety of activity kits ranging from art, cooking, and more. Together, Hometap was able to drop off eighteen kits to Heading Home in August, allowing them to be distributed to families, adults, and children across the Greater Boston area. 

 

 

While our team always looks forward to the Up & Out day, and we’re disappointed that we weren’t able to partake this year, we were thrilled that Heading Home was still able to provide other solutions for the Boston community and the volunteers looking to make an impact. If you or your business is looking for a creative way to give back to the Boston community during COVID-19, you can take a look at other virtual volunteering programs Heading Home offers at headinghomeinc.org.

9 Most Common Reasons to Order a Property Appraisal

House Blueprint

A home appraisal is an objective, independent, and impartial assessment of a property’s real and current value, also referred to as the fair market value of the home or property. While the most common reasons for home appraisals tend to be related to home financing, such as selling, buying, or applying for a loan, there are many reasons why a property owner may want or need to request an appraisal.

1. Preparing to buy
When you’re buying a home, you’re usually the party on the hook for the appraisal unless you negotiated with your seller or lender to cover the cost (often with other closing fees). That’s because the home appraisal is meant for your lender. Your bank wants to offer you a mortgage that covers the cost of the home—not more.

2. Preparing to sell
Some homeowners opt to get a home appraisal before selling, particularly if they can’t figure out a list price. Note that the home buyer’s lender will often order their own appraisal. This is why some sellers opt to perform a do-it-yourself home appraisal that, while not official, gives them an accurate range for a list price.

Did you know 76% of sales closing in January 2020 had contract contingencies? 43% pertained to getting an acceptable appraisal. (Source: National Association of Realtors

3. Looking for financing
When you’re looking to access your home equity —whether through a home equity loan, home equity line of credit (HELOC), refinance, or a home equity investment—your lender or investor will need to know the market value of your home in order to determine the amount of equity you have available.

4. Divorce
For homeowners settling a divorce, a home appraisal ensures the value of the house is split evenly between homeowners. If one party plans to stay in the house, lawyers can accurately assess how much that party owes the other. If both parties agree to sell the home, the appraisal can make it easier to agree on a list price.

Download the Homeowners Guide to Home Value

5. Bankruptcy
If a homeowner files for bankruptcy, they are required to prove their current financial situation to the court through documentation that includes income, debts, and value of assets, including any property.

6. Construction defects
If a home is significantly damaged due to construction defects and the homeowner decides to file an insurance claim or take other legal action, they will need to prove what damage is from the construction defects. The first step to recouping the losses is often an appraisal of the property.

7. Bail bonds
If a homeowner is looking to use their home as collateral for a bail bond, a home appraisal is needed to determine the value of the property and ensure that its value is greater than the amount of the bond.

8. Eliminating PMI
If a homeowner has a conventional loan and made a down payment of less than 20% on the house, then they likely had to purchase private mortgage insurance (PMI). If property values have increased in the property’s area, the homeowner can elect to order a home appraisal to determine if the PMI payments may be eliminated.

How do your homeownership costs compare to other American homeowners like you? Download your free copy of our 2021 Homeowner Report and find out. 

2021 Homeowner Report

9. Property tax assessment appeal
If a homeowner feels the tax assessor valued their home higher than its worth, the homeowner may appeal their property tax assessment. In this case, a professional home appraisal can serve to support the appeal.

The list keeps going, but the most important takeaway is that no matter your reason for having your property appraised, it’s imperative that the appraisal is current and accurate in order to obtain its true current market value. Ensure that the appraiser is credible and certified, and that they have access to every area in and outside of your home.

LEGAL DISCLAIMER

The opinions expressed in this post are for informational purposes only. To determine the best financing for your personal circumstances and goals, consult with a licensed advisor.

How Hometap works

Hometap can be a smart way to tap into your home’s equity without taking out another loan. Think of Hometap like a time machine for your home equity: it helps you fund your present without the added stress of monthly payments and interest. Ready to put the future value of your home to work for you today? Watch the video to see how!

The Homeowner’s Guide to Home Value and Appraisals

Know exactly what to expect before your home appraisal with this comprehensive guide.

Find out what home appraisers look for during an appointment, what you can do to improve your home’s value, and why Automated Value Models are gaining popularity.

Read the guide to learn:
  • What to do — and avoid — during an appraisal, according to experts
  • Why your home value may be higher or lower than expected
  • How traditional home appraisals and Automated Value Models compare