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Mortgage lending reforms of recent years that now require the use of appraisal management companies have too often resulted in low-balled appraisals, minimizing builder profits and derailing potential sales altogether. Inexperienced or out-of-town appraisers who don't know the market can improperly skew the appraised value of a home by selecting the wrong comps or not properly adjusting for foreclosures and short sales.
The improved market conditions of recent months have slightly edged the pendulum back towards the norm, but under-valued appraisals still plague the industry, as indicated by the National Association of Homebuilders (NAHB) current push for residential appraisal reform.
In the meantime, many sellers are finding that hardscapes can help restack the deck to boost appraisal values in their favor. According to a 2014 research study reported by the National Association of Realtors, sophisticated landscaping that incorporates hardscapes - which includes pavers, retaining walls, fountains, masonry work, fire features, etcetera - can boost a home's overall value by 10 to 12 percent on average, and as much as 20 percent in some markets.
"Today's families are geared to enjoy the outdoors," explains RE/MAX broker Candy Modeen, who notes that a hardscape design with an outdoor kitchen is a better investment than a poolscape. "Many people specifically don't want a pool because of the upkeep or safety issues, but no one looks at an outdoor kitchen and says, 'I don't want that.'"
According to Modeen, hardscaped outdoor living spaces like outdoor kitchens are becoming standard in higher-end homes and increase any home's marketability, as well as appraisal value. This is also marked by the fact that MLS listings now offer a feature to notate exterior improvements exceeding the scope of a deck or patio slab.
"The builders that I work with who add hardscapes and outdoor kitchens turn over their spec homes much more quickly and rarely have an issue with appraisal value," Modeen said.
The NAHB offers additional insights for successfully navigating the appraisal process in their report: Here's the Lowdown on Thwarting Low Appraisals.