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Buying a home &mdash; particularly your first &mdash; often feels like an emotional roller coaster ride (buckle up!).
How can you get a better handle on balancing the heart and the head?
Look to home appraisers, who do this every day. It's their job to review a home for sale with an unemotional eye, make a solid evaluation of its market value and determine that the asking price is fair. Generally, residential home appraisers follow guidelines set forth by the Uniform Standards of Professional Appraisal Practice (USPAP) and then layer on any additional requirements from the lender providing the home loan.
What if a first-time homebuyer could borrow from an appraiser's toolkit to tackle this important decision? Here is some wisdom from appraisers to help first-time buyers make a savvy choice when selecting a home.
<h2>Why do you need an appraisal?</h2>
A home lender &mdash; a bank or other creditor &mdash; requires an appraisal to ensure the home is worth what the buyer is paying, and to help determine if a lender is likely to be repaid for the loan if the home must be sold because the buyer defaults on the mortgage loan.
This is a key step in getting a mortgage and acts as a safeguard for the bank. Plus, a home that's damaged beyond repair or overpriced for the market could tank even the most careful saver's entire financial plan. Ultimately, it's a win-win situation where both banker and homebuyer can benefit from an appraisal.
&ldquo;The fair market value of a home is an unbiased opinion. The appraiser has no agenda other than to make sure the property isn&rsquo;t overpriced,&rdquo; says Gynell Vestal, owner of Vestal Appraisal Solutions in Houston, TX, and founder of the Consumer Home Value website.
Vestal feels the appraisal process can also help safeguard the larger economy. How? Because economic bubbles (where the price of something exceeds the actual value) can occur when too many homebuyers pay too much, and then can't later sell their homes for what they thought they were worth. Fair appraisals can keep a bubble from ballooning, and, ultimately bursting.
While it's typically the mortgage lender that orders the appraisal, the homebuyer foots the bill. The cost can vary based on the home but typically ranges between about $300 and $400. The appraiser is required to disclose any information that is integral to the valuation of the property in the appraisal report.&nbsp;Lenders are in turn required to forward a copy of the appraisal report to homebuyers if the loan is a first lien.
Sami Sada, an independent home appraiser with Sada Associates, recommends an appraisal, even for cash buyers who aren't seeking a mortgage. Otherwise, a buyer can easily pay more than a fair asking price, particularly in an area where homes sell quickly and decisions can be made hastily. &ldquo;A few hundred dollars is a good investment when you&rsquo;re investing hundreds of thousands of dollars in a property,&rdquo; Sada notes.
<blockquote>
The fair market value of a home is an unbiased opinion. The appraiser has no agenda other than to make sure the property isn&rsquo;t overpriced.
</blockquote>
<img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/GettyImages-1083736356_web.jpg" alt="Couple opening front door of new home">
<h2>Can my real estate agent appraise my home?</h2>
"One of the misconceptions is that appraisals aren't needed because real estate agents can assign value," Vestal explains. "Real estate agents can handle the sale and facilitate the transitions, but an appraisal is much more analytical. We study the data to see how it affects value and marketability."
At the same time, a real estate agent can serve as a source of important information for homebuyers. In most U.S. states, selling (also called "listing") agents are expected to disclose facts about a home, such as its structural condition, that may influence its marketability. (Consider looking up the laws governing home sales and disclosures in your state.) If you buy directly from the owner (For Sale By Owner) &mdash; meaning no selling agent is involved &mdash; it could be a big risk, according to Sada. He wouldn't recommend taking the risk unless the asking price is at least 10% below what it would be through a real estate agent.
<h2>What factors affect the appraised value of a home?</h2>
&ldquo;Real estate is so micro in nature; so much depends on what is acceptable or expected in a particular neighborhood,&rdquo; Vestal says. For example, hardwood floors may be the expectation in one neighborhood while they&rsquo;re an upgrade in another.
Comparable sales (commonly known as comps) offer a qualitative comparison of recently sold homes that share certain features &mdash; like number of bedrooms &mdash; within a specific geographic area. Comps are used to determine a home's listing price.
An appraisal, meanwhile, includes similar neighborhood and community information but also adds in many more property-specific details; these factors can have a marked effect on the ultimate appraised value of the home. Sometimes those numbers &mdash; the comps and a home's appraised value &mdash; don't line up.
Value is based on the comps within a defined neighborhood, within a recent time period (ideally within 120 days). The more sales there are in a specific area during that time, the more comps there are for an appraiser to choose from. More reference points means more latitude to find the most accurate homes to use for comparison.
Still, there are certain factors important to an appraiser that a homebuyer can use when shopping.
<blockquote>
There are certain factors important to an appraiser that a homebuyer can use when shopping.
</blockquote>
<img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/GettyImages-971630432_web.jpg" alt="a man and a woman sit together on a couch in their new living room">
Location is king, as expected. Does the home back up to commercial businesses or the interior of the neighborhood? The market's reaction to those variables is important, and these features can be desirable in one area while undesirable in another.
Size of home. Anything greater than the standard size of 1,500-1,800 square feet will add value, up to a point. As home size increases, however, the value per square foot decreases.
Number of bedrooms. A fourth bedroom adds a good amount of value while the value of adding a fifth, sixth or seventh decreases incrementally.
Number of bathrooms. Same goes for bathrooms: After two or two-and-a-half, the value of each added bathroom decreases. "The third bathroom won't add as much value as the second bathroom," says Sada.
Number of garages. There is a home-price jump from a one-car garage to two. However, there is not much value for anything above a three-car garage.
 Quality of materials and upgrades. Custom cabinets, higher-quality countertops and high-end appliances will all add to the value of a home. So will a room's accessibility and functionality. How easy is it to navigate the kitchen, for example? What is the access like from refrigerator to stove to sink?
Convenience factors. Proximity to public transportation is important in urban areas; accessibility to conveniences like highways and shopping are a plus in the in suburbs. Features that inconvenience a homeowner will reduce value. Think: a kitchen on a second floor (common in modern two- or three-level condominiums) or entry through a garage or long hallway.
Regional variances. In some regions, it's the norm to have finished basements, attics or garages. These spaces aren't included in the livable square footage but can "affect marketability and add some contributory value," says Vestal. That's what Jennifer Whigham experienced when she purchased her three-bedroom end-unit town home in Coatesville, PA. "The home had a finished basement that was grandfathered into a pre-existing code," she says. "The result was that a homeowner wouldn't be able to finish another similar basement at the same cost." For Whigham, that finished basement added a lot of value.
<h2>Does it matter how long a home has been on the market?</h2>
Average days on market in an area can be an indicator of the direction of housing prices. More than 90 can indicate a slowing market while fewer than 20 can indicate a market is hot. A stabilized market is generally found between 30 and 45, according to Sada.
If a home has been on the market for more than 100 days, a homebuyer may want to ask why. It could just be that the seller has set constraints (like stipulating showings must be by appointment), but it could be a sign of a larger problem, like an issue flagged by an inspection.
<blockquote>
If a home has been on the market for more than 100 days, a homebuyer may want to ask why.
</blockquote>
<h2>What if the appraised value doesn&rsquo;t match the offer price?</h2>
Although three-quarters of home settlements happen on time, appraisal issues account for 20% of those that don't. A common concern is when the real estate agent's Comparative Market Analysis (CMA) doesn't match the appraiser's assigned value.
That&rsquo;s what happened to Natascha Martens after she bid on her first home in Austin, TX. Her dream home appraised for substantially less than the offered price, but she and her husband loved it so much that they negotiated with the buyers to split the price difference. That type of negotiation isn&rsquo;t always possible. In addition, in some cases, your lender may be able to request more information about specific items within the appraisal report, particularly if any documentation errors are found or if the comps are out-of-date.
You may want to discuss with your realtor your rights and options under the purchase agreement to require the appraised value be no less than the purchase price, if you&nbsp;want&nbsp;the right to walk away if the value is lower. That's what making an unemotional decision is all about.
&nbsp;

Why to Think Like an Appraiser When Buying Your First Home

​​For many Americans, purchasing a home is not only about establishing roots in a community, but it's also a step towards building generational wealth.
However, barriers exist and, for Black Americans in particular, homeownership dreams have been historically diminished or denied and their neighborhoods and communities devalued.
Ayesha Selden grew up in the '80s in a Philadelphia neighborhood which she describes as, "The kind of neighborhood where you played outside at your own risk. It was rough, however, it was just walking distance to downtown Philly."
<img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/AdobeStock_282398904.jpg" alt="A young couple moving items into their home.">
When Selden was nine years old, her mother purchased a small home where she, her sister and grandmother lived until her mother married and decided to sell the home. At this same time, Ayesha was moving on to begin her studies at nearby Temple University, but she advised her mom not to sell &mdash; Selden had a feeling the house would be worth more in the future.
Selden was correct in her housing market predictions. By the time Selden was 24 and able to purchase her first home, she'd been priced out of the neighborhood she grew up in. The neighborhood, revitalized with green space, is now seen as desirable for its walkability and proximity to downtown. Selden says the house her mom once owned is worth over $600,000. Her mom had sold it in the late '90s for just under $40,000.
Selden, now a successful certified financial planner, private wealth advisor and real estate investor, tells her clients and followers on social media to "not sell grandma's house" in an effort to protect Black communities against housing instability and focus on ownership. "I knew our communities would turn," Selden reflects. "The only way we get out of the rent being too high, is through ownership."
Unfortunately, Selden's experiences are not unusual. Her advice to Black communities to maintain prior generations' assets to build wealth is wise. What's more, it could take root for more people as lasting efforts to address these inequities by changing policies and lending practices to create more equitable access to homeownership.
<img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/AdobeStock_409659275.jpg" alt="Two young girls run through stacks of moving boxes.">
<h2>Black homeownership historically</h2>
A 2015 Social Science Research Council report commissioned by the ACLU notes that the 2008 crisis all-but wiped out the gains of homeownership amongst Black Americans that hadn't been seen since the 1960s. Compounding that, the pandemic exacerbated housing instability for Black families across the country.
However, this inequity is not just the result of economic ups and downs over the last few decades.
"Because of anti-Black legislation, many Black residents or residents of Black majority neighborhoods of the past could not pass on wealth to their children, and those children could not pass on wealth to their children," explains Dr. Andre Perry, a senior fellow at the Brookings Institution.
Dr. Perry's research points not just to barriers to homeownership, but also to how Black homes in Black neighborhoods are often devalued by as much as 23%, or about $48,000 per home, resulting in about $156 billion in lost equity.
"It goes without saying, we also need to remove the dredge of racism that extracts wealth from those neighborhoods: like bad appraisal practices, bad real estate agent behavior and predatory lending," Dr. Perry says.
While efforts to make capital more accessible to Black citizens seeking to purchase is key, it also requires a community. Selden even suggests that new homeowners "house hack": rent out a spare bedroom to help with payments and find unique ways to use their homeownership to help put others in a position to buy a home of their own.
"Group economics will give [Black people] the ability to accomplish more together than individually. We need to make sure that we put [Black communities] in a position to win," says Selden.

Generational Wealth Starts at Home

What does it mean to sell a home? A home is more than just a roof and four walls, but also a place where you built memories. Preparing to sell is a big decision and can be a challenging process given the many financial considerations that arise along the way. Don't worry — there are smart, simple ways to approach, manage and even minimize the expenses associated with selling your home."It's important that you go into it with the understanding that this is one of the most stressful things," says Katie Walsh of The Walsh Team relators. But "as long as your house is priced well and in good condition and you have good representation, it will be smooth." Walsh says there's a 70% chance the house will close.<img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/working from home.jpg" alt="man working from home using laptop " class="right_image" /><h2>Should you be your own realtor?</h2>One of the early questions you'll face is: Should I plant a "For sale by owner" (FSBO) sign on the lawn and tackle the process myself? It may increase the profit you make off your home sale: For many home sellers, the commission paid to the realtor makes up the bulk of their closing costs. But is it worth it to sell solo?Only a small percentage of sellers opt to go this route. According to a 2017 National Association of Realtors (NAR) survey, 89% of sellers use a real estate agent. The same NAR report from 2016 found the average price of a home sold through an agent was $60,000 more than the average FSBO sale, indicating that money may be getting left on the table in owner sales.Consider the workload and time commitment, too, before you go it alone on your home sale. Marketing your home, arranging (and attending) showings, educating yourself on how to price a home appropriately and figuring out how to prepare paperwork are a few of the responsibilities you'll take on.If you do end up selling your home yourself, it's still a smart idea to consult with a realtor as you weigh the decision. For one thing, you can ask questions about the health of the local housing market.<img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/download.jpg" alt="man installing floor" class="right_image" /><h2>Prioritizing home repairs</h2>Determining which repairs and upgrades will increase the value of your home and which can be overlooked is a great debate for home sellers.The first step before making repairs is to determine what, exactly, your options are. "I always recommend getting an inspection before you sell so you know what you're looking at," says Walsh. Legally, you're required to disclose any problems to potential buyers.Once you have that overview, it's time to pick your battles. Start with estimates for the necessary repairs or upgrades that will catch the eye of potential buyers — roofs, AC units and electrical systems, for example.Next, look into those upgrades which typically provide the best return on investment — kitchens, bathrooms or floors. If the carpets are dirty or the walls are in need of a paint job, it's generally worth it to invest the money to fix those items, Walsh adds. <img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/web_Fresh coat of paint for my home away from home _ to new beginnings .jpg" alt="man painting wall with fresh coat of white paint" class="right_image" />Be careful in choosing which projects to undertake — if an improvement goes over budget or fails to nudge up your eventual sale price, you'll be shelling out money for amenities you yourself will never enjoy.Also, be aware of the role location will play in your home's appraisal. "You never want to 'over-improve' your house," says Bob Gorski, a certified residential appraiser with Arizona Premiere Appraisers. "Your value is also tied to your neighborhood sales."Gorski points to landscaping as the sort of tempting project that — unless the home has no prior landscaping — is usually too subjective to raise the value of a property.Putting your home's best foot forward during an appraisal can help ensure the home is priced fairly. Gorski suggests cleaning and staging your home, as you would during a showing. He also recommends visiting other open houses in your neighborhood to get an idea of what a fair list price would be.You also can have print outs of at least three neighborhood comps — similar size, same year built, comparable subdivision — that have sold within the past 12 months or so to give the appraiser that will buttress the research he or she has (hopefully) already done. It's also a good idea to have receipts or proof of any recent home upgrades or renovations available as well. "You want to present the best possible picture to the appraiser," says Gorski.And don't be afraid to seek out professional advice. "Definitely bring in a realtor before you spend any money," Walsh says.<img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/WEB_House keys hanging from door. .jpg" alt="keys left in door" class="right_image" /><h3>How much are closing costs?</h3>Closing costs for buyers vary considerably by state, but typically land within 2% and 5% of the total value of the home. On a $250,000 home, for example, this translates to roughly between $5,000 and $12,500. However, closing costs for sellers may end up being as high as 10% in total.A large portion of this fee will no doubt be the sales commission you pay your real estate agent — which, it's important to note, is not set in stone. You can try to negotiate a lower rate at your listing appointment, which ultimately could save you thousands of dollars. The best way to see if a realtor will lower his or her commission fee? Simply ask, suggests Realtor.com. If cost is an issue, interview a few realtors to see what percentage they quote you so you can get a good idea of what's a fair and reasonable commission.Before you ask, however, keep in mind your realtor will likely be splitting his or her commission with the buyer's agent as well as a brokerage house. They also may be paying out of pocket for costs associated with marketing — professional pictures, advertisements, flyers or open house refreshments.The dance, for you as the seller, is about achieving a balance that both secures the best possible rate for yourself while still holding out the promise of a commission large enough to entice an experienced, savvy realtor.<h3>One final fee — what is capital gains tax</h3>In negotiating the close, be aware of capital gains tax which is what you have to pay to the government if the value of your home increases. For example, if you purchased a home for $100,000 and sold it for $150,000, you'd have to pay the taxes on the $50,000 increase or "capital gains." According to the 2018 tax code, the percentage of capital gains taxes you pay depends on how much you make.Don't panic — there are a few important caveats to those daunting numbers, namely:<ul><li>If you've lived in the house two out of the last five years, you're exempt up to $250,000 in capital gains taxes. If you're married, that exemption doubles to $500,000.</li><li>If your home was an investment property you can request "investor rates," discounts Walsh says many fail to take advantage of.</li><li>You may be able to avoid paying capital gains taxes by purchasing another investment property of equal or greater value than the sale price.</li></ul>Many buyers end up not having to pay capital gains tax. So rest assured that you might not to have to deal with this issue.Remember, a key aspect overall of saving money while selling a house is simply to be engaged in the process and not take anything purely at face value. "Just make sure you ask, 'Are any of these fees negotiable?' Because sometimes they are," Walsh advises.And now that you have the inside track on fees and terms, you're ready for a successful sale.

Get Your House Sale in Order: How to Save on Closing Costs

Whether you're looking to sell your home or just spruce it up, there are lots of ways to update your space. But which ones are worth the time and money?
Boosting curb appeal is generally a smart move because a beautiful exterior makes a good first impression on potential buyers; it's also the first thing you see when you leave and return home each day. Simple interior switch-ups (new fixtures, hardware or tile, for example) can refresh your rooms too.
To pin down some of the best projects to tackle, we tapped five pros &mdash; including a realtor, a stager and a landscape artist &mdash; to share their value-adding favorites.
<h2>Level-up the entrance</h2>
A well-cared-for path to the front door instantly elevates the look of a home, so consider putting in a new brick or stone walkway, suggests David Migdal, president of Highland Park, IL-based Garden Consultants. If that&rsquo;s not an option, you can also make this spot more welcoming by setting up a seating area with a few chairs and a small table.
And don&rsquo;t overlook the front door, says Migdal. &ldquo;You could paint it so it stands out or replace it with a glass door if the house is modern.&rdquo; To dress it up even more, add some stylish accessories; think earthy planters, an elegant new mailbox or sleek address numbers.
<h2>Focus on the foyer too</h2>
This often-underrated area sets a tone for the whole home, so if yours feels spare or uninviting, it may be worth a refresh. &ldquo;Look at ways to simply activate that space,&rdquo; says Brian Wickersham, founder of AUX Architecture in Los Angeles, CA. &ldquo;Hang fixtures, put art on the walls, have fun with paint color. It can give punch and life to that space immediately when you walk in.&rdquo;
<blockquote>
Hang fixtures, put art on the walls, have fun with paint color.
</blockquote>
<h2>Give high-traffic spots a little love&nbsp;</h2>
When it comes to improving your rooms, you can maximize your efforts and budget by putting yourself in the mindset of a potential buyer. &ldquo;Most buyers are unwilling to do the work and want to walk into a home that&rsquo;s move-in ready,&rdquo; says Brad Lippitz, president of Chicago-based Brad Lippitz Group, Compass. &ldquo;The whole idea is balancing your return with what you put out.&rdquo;
To help your home feel move-in ready, suggests Lippitz, your best bet is to concentrate on key areas like these two:
<ul type="disc">
<li>Bathrooms.&nbsp;These spaces get a lot of use, so any spruce-ups will make a noticeable difference in your daily life. Plus, run-down bathrooms can be a big turnoff. &ldquo;The worst thing for a buyer is to walk into a bathroom and feel like you&rsquo;ve walked into someone else&rsquo;s used bathroom,&rdquo; says Lippitz. Giving walls a fresh coat of paint and buffing floors so they are scratch-free can go a long way, he says. And it's a good idea to re-caulk bathtubs and showers so they look &rdquo;crisp and fresh.&rdquo;</li>
</ul>
&nbsp;
<ul type="disc">
<li>The kitchen.&nbsp;A kitchen is the hub of the home, and because the backsplash is a focal point, it warrants special attention. If yours is outdated, consider changing it out for one that's more current, Lippitz suggests. When in doubt, white subway tile is a timeless and universally appealing choice.</li>
</ul>
<blockquote>
Most buyers are unwilling to do the work and want to walk into a home that&rsquo;s move-in ready.
</blockquote>
<img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/easy-upgrades_body-1_1361359903.jpg" alt="white and light wood kitchen with a honeycomb pattern white tile backsplash">
<h2>Make some fast fixes</h2>
A few simple solves can help a room feel notably more polished, which is why it's important to look around your home every once in a while as though you're a visitor; otherwise, it's easy to miss details that are feeling dated or shabby. "Like any other relationship, over time you get used to it and take it for granted," says Amy Bloomer, owner of Baltimore, MD-based home organizing company Let Your Space Bloom.
It's quick and easy to change your hardware, Bloomer says, and replacing your brassy kitchen cabinet handles or old-school wooden knobs on a dresser can modernize the whole room. Look for clean-lined hardware in muted metals or an edgy matte black.
Lighting is another update that can make a dramatic difference. Consider swapping out an ornate chandelier or floor lamp with sleeker versions or plug-in sconces.
<img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/GettyImages-601128064_web.jpg" alt="white walled living room with a gray couch, a low wooden table and a gray wooden cardboard deer head mount on the wall">
<h2>Streamline your spaces</h2>
When professional home stager Justin Riordan, founder of Space and Archer Design Agency in Portland, OR, and Seattle, WA, preps clients' homes for sale, he'll often take a "less is more" approach to furnishing a vacant space or reconfiguring the home and existing household items.
That can mean stripping out some decor in a family room. "We tell everyone to take down their window coverings and bring in as much light as possible," Riordan says.
Or it can be as simple as removing shelving from the walls of a basement. "Making the basement clean and empty so people can see exactly what they're getting will make for a faster sale," he notes. Another top tip: Play up the plants in your yard, Riordan suggests. "Put down mulch that's almost black to make sure your flower beds look rich."
&nbsp;
&mdash; With additional reporting from Life and Money by Citi editors

Easy Upgrades That Can Add Value to Your Home

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