It’s a common question that we get asked here at the appraisal office: does having unfinished projects affect my home’s appraisal? The answer, unfortunately, is not as straightforward as we would like it to be. In general, unfinished projects can potentially lower your home’s appraised value, but there are some caveats to keep in mind.
Caveat #1: It Depends on the Type of Project
The type of project you have will play a big role in whether or not it will have a negative impact on your home’s appraisal. For example, if you have an unfinished kitchen renovation, that is likely to have a bigger impact than an unfinished Attic bedroom.
Why? Because the kitchen is one of the most important rooms in the house, and potential buyers are going to be very concerned about any incomplete work that needs to be done. On the other hand, an attic bedroom is not as crucial to the functioning of the house, so incomplete work is not likely to have as big of an impact.
Caveat #2: It Depends on How Far Along the Project Is
Another important factor to consider is how far along your project is. If you’ve only just started, then it’s likely that the appraiser will not even notice the work that needs to be done.
However, if you’re close to finishing but just need to do some minor touch-ups, then that could potentially lower your home’s value. Why? Because potential buyers are going to be worried that they’ll have to put in more work than they bargained for. They may also be concerned about any potential code violations that could come up as a result of incomplete work.
Caveat #3: It Depends on the Appraiser’s Opinion
In the end, it really depends on the opinion of the appraiser. Some appraisers may be more lenient when it comes to unfinished projects, while others may strictly adhere to the guidelines set forth by Fannie Mae and Freddie Mac. If you’re unsure about how your appraiser feels about unfinished projects, we recommend asking them directly before starting any work. That way, you’ll know for sure how it could potentially impact your home’s value.
Conclusion:
As you can see, there’s no one-size-fits-all answer when it comes to unfinished projects and appraisals. It really depends on a number of factors, such as the type of project and how far along it is.
In general, though, unfinished projects can potentially lower your home’s appraised value. If you’re thinking about starting any renovations, we recommend talking to your appraiser first so you know how it could affect your home’s value.
