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When to Update Your House Valuation

Your home’s value can fluctuate frequently depending on market conditions. Knowing your home’s current fair market value is crucial for making well-informed decisions about selling or leveraging your equity. While you don’t necessarily need to get a formal appraisal done every single year, there are certain times when proactively updating your home valuation should take priority.

At Minimum Every 2-3 Years

A good general rule of thumb is to update your home’s valuation at minimum every 2-3 years. Real estate markets often move quite fast, and an outdated or stale appraisal could leave you with an inaccurate or skewed picture of where your true equity position stands today. Getting a new appraisal performed every few years ensures you have a relatively current snapshot of what your house would likely sell for in the present market.

With a fresh appraisal report in hand from a licensed professional, you can then revalue and adjust your overall net worth and financial position accordingly. This provides you with better visibility for near-term financial planning needs. You’ll also feel fully prepared to act should specific life circumstances arise that necessitate selling your home or cashing out equity in the near future.

Before Officially Listing for Sale

When you are clearly preparing to put your house on the active real estate market for sale, obtaining a new appraisal is generally essential. The up-to-date appraisal provides your real estate agent with a credible and impartial price opinion to lean on heavily when recommending and setting the final listing price. It also gives them recent comps to cite when marketing the home’s value and justification for the asking price to prospective buyers.

In particular, an appraisal completed within the past 6 months holds significantly more weight and relevancy versus appraisals that are several years old or outdated.

The new appraisal also supplies a detached estimate directly from a licensed professional appraiser versus having to rely solely on your own analysis of market comps or just taking your real estate agent’s word for it. This evidence-based valuation approach tends to generate increased confidence, trust, and perceived fairness from potential home buyers regarding the listing price and underlying basis.

After Major Home Upgrades or Improvements

Making major upgrades or renovations to your home, such as finishing a basement, adding a master suite, renovating the kitchen or bathrooms, can positively impact your home’s fair market value. However, you likely will not be able to fully realise or capture the maximum return on investment (ROI) from those home improvements without getting an updated appraisal.

Itemise and tally up all of your latest home upgrades and improvement costs. Then schedule a new appraisal report to objectively quantify and validate the dollar value lift that those changes have added to your home. This becomes especially helpful if you are planning to soon cash-out some of the newly added equity in order to recover the costs of the renovations themselves. The fresh appraisal will legitimise the added property value for both you and any lenders.

When Refinancing Your Mortgage

Virtually every mortgage lender will require a current home appraisal before they approve you for a mortgage refinancing. The up-to-date appraisal verifies and substantiates the present-day fair market value of the home so lenders can accurately evaluate the loan-to-value ratios based on that value. This allows them to ensure the refinance loan amount and terms fit within their lending guidelines and policies.

Submitting an outdated, stale, or old appraisal report often will not suffice when applying to refinance. The lender wants solid reassurance and proof that your current home equity position still adequately supports providing the mortgage refinance loan. Getting a new appraisal done upfront also allows you to double check that the numbers and terms still pencil out in your favour for a refinance.

After Notable Local Economic Changes

Various local market factors like major new commercial developments in the area or shifting neighbourhood demographics can tangibly impact housing values and demand. For example, an area that gains significant prestige and broader appeal may see real estate prices appreciating rapidly. On the flip side, events like large local employers closing down plants/offices can work in the opposite direction.

Pay close attention to the overall housing market climate and general economic conditions in your specific zip code. If you notice any major changes unfolding that seem reasonably likely to influence property valuations, you may want to request a fresh appraisal to accurately quantify the effects, if any, on your individual home’s updated market value.

When Relocating to Another Region

If you are planning to move and relocate to a completely different metro area or state, consider ordering a new appraisal on your current home while you still reside in it. This will establish a sound value baseline before you vacate the property and eventually list it for sale from afar in the future.

The current appraisal also provides very useful context when you begin evaluating home prices and affordability in your desired new location. Comparing your existing home value to potential new homes you are considering can help you prudently gauge budget, affordability, estimated moving costs, and how much equity you may be able to roll over into your next home purchase.

While getting full home appraisals done annually is likely overkill for most homeowners, updating your home valuation every 2-3 years is generally wise for staying informed. Any major life changes, financial decisions, or shifts in your local real estate market can also signal it’s an opportune time to reaffirm your current equity position with a new appraisal. When armed with a fresh perspective from a licensed appraiser, you can in turn make fully-validated, strategically sound housing and money decisions.