I'm currently looking into a HELOC and wonder if the community can chime in. I am specifically curious about how an appraiser might value upgrades.
In my situation, I bought a new construction home and closed on Memorial Day weekend last year. The same model I'm in is now selling for 92k more than my purchase price. I also added 45k in upgrades. Since I moved in at nearly the same time as all my neighbors, we've forged a pretty tight community. That said, I've toured everyone's house, and I added the most upgrades in my area by a good margin.
How much value will an appraiser account for in terms of the 45k in upgrades? As I shop around from bank to bank, having this information in my back pocket will be a huge plus.
Thanks in advance to those who chime in!
Only as much as an identical house with the same upgrades sells for. Other than that, probably less than half the cost of the upgrades.
Definitely give the appraiser a copy of the upgrades along with the costs though.
Something to be aware of with HELOCs is that there is no consistency in how the appraisals are done. Some lenders do regular appraisals where they go inside the house, take pictures, etc. Some just do "drive by" appraisals and never even see the inside (or any upgrades you made in there). I've even heard of lenders that do the appraisal from a computer based on online records, tax assessed value, etc.
So the answer to your question is going to depend, in part, how the particular lender does their appraisals.