New Look, Better Appraisal
A new roof isn’t as popular as redesigning your bedroom or bathroom. In fact, we don’t tend to think about our roofs that much until they cause a problem.
But adding a new roof can seriously boost your home’s appraisal value–if you know how to choose a roof.
Here’s how adding a new roof can add value to an appraisal, and a few things to consider when replacing a roof.
How Home Appraisal Works
First, you need to understand how a home appraisal works.
A home appraisal is used almost exclusively in sale-and-purchase transactions. Basically, an appraisal is when you get an unbiased, professional third party to assess the value of your home.
Appraisers typically use Fannie Mae’s Uniform Residential Appraisal Report, which asks appraisers to describe the neighborhood, the interior and the exterior of the property, and the sales of homes of comparable value in the area. Based on this, the appraiser makes an analysis and presents their conclusion of the home’s value.
You might think that you don’t need an appraisal–after all, you know what you paid for your home. But appraisals are valuable to buyers and sellers alike.
Factors Affecting Home Appraisal Value
An appraisal is the easiest way for a buyer to assess whether you’re asking a reasonable price for the property. It’s also often a prerequisite to qualifying for a home loan, as lenders want to verify the home’s value before they agree to match it with a loan.
And besides a home inspection, it’s one of the best ways for a buyer to spot any issues that come with a house.
For the seller (you), the appraisal validates your asking price to a wavering buyer and helps you get a
return on the investments you’ve made in the house…if you made the right improvements, that is.
An appraiser will assess several factors in determining the value of your home.
One of the big factors that determine your home’s final appraisal value is structural strength. When the appraiser looks at your home, they’re basically assessing how sound it is as an investment. The more sound the house, the more valuable the investment.
Think of it this way. Let’s say you’re buying a car. The question isn’t whether or not the value will decline, but rather how much it will decline and how quickly. If a car is old and has transmission problems, it’s not as valuable as a younger car without similar issues because the owner will lose money trying to fix the problem later.
The same principle applies to houses. One of the most basic functions of a house is to provide shelter. To do that safely, it needs structural strength.
A house with poor structural integrity or worse structural integrity than comparable houses in the area is a riskier investment and thus not worth as much. To figure out your home’s structural integrity, an appraiser will look at the state of your house’s construction and the materials used to build it.
They’ll also check and see whether any of the materials have been updated since initial construction or whether the house is all original materials. Updates to structural features like windows and (you guessed it) the roof will get you additional points.
Curb appeal refers to how attractive your home is to buyers when they drive up to the curb. It’s an art and a science, taking into account things like:
- Your lawn
- Your landscaping
- Your exterior paint
- Your driveway
- Your front door
- Your windows
- The size of your lot
- Views from your property
It even includes the smallest details, like the potted plants on your porch, the mailbox, even the porch light.
A home appraiser will assess curb appeal as part of their examination, awarding a higher appraisal value to clean, aesthetically-pleasing homes.
You might not realize it, but your roof is a big part of curb appeal. A roof can account for up to 40% of a home’s appearance from the curb. If your roof is old, faded, or missing shingles, buyers will spot it right away–and see a hefty maintenance fee in their future.
The relative age of your home will also be assessed in the appraisal. But youth or lack thereof doesn’t automatically translate to a lower or higher appraisal value.
Most new homeowners think that houses depreciate in value over time. Real estate can increase in value over
time, but the physical structure of your house isn’t what gains value– the land is what appreciates.
Unlike other assets, the land is a fixed resource. Real estate agents cannot manufacture new land out of thin air. So as the population increases, the land is an increasingly prized resource. This is especially true of areas like cities where the population density is extremely high.
But not all properties will increase in value over time. Some actually decline in value. This is because of the physical structure built on the land. If built and left untouched, the structure will depreciate in value, eventually cutting down the value of the land it occupies.
A property increases or decreases in value based on how much value improvements to the property add or detract. These improvements, when combined with local supply and demand, can cause a home to significantly increase in value over the years.
This is why home appraisers pay close attention to recent improvements made to your house.
Recent cosmetic upgrades, like updating your bathroom or redoing your landscaping, can increase the overall appraisal value.
Structural upgrades can help your appraisal value even more. Safety improvements are the biggest concern here, which means that updates to your roof and windows are the best investment choice.
What a New Roof Brings to Your Home
A new roof adds value to your home in a couple of different ways. What you prioritize can change the final appraisal.
For one thing, a new roof can bolster your energy efficiency. You see, your roof actually plays a big role
in how well your home conserves heat.
That’s because most of your energy expenditure is literally through the roof.
Remember basic science, when you learned that warm air rises and cool air sinks? The same is true of
your house–in the winter, warm air rises to the highest part of the house (your roof). If the roof has the right materials and is well-insulated, it will keep most of that heat from escaping.
If, on the other hand, it’s summertime and the hot sun is beating on your roof, a poorly insulated roof with poor solar reflectance will trap heat and allow cool air to escape, raising your overall temperature and forcing your AC to work harder to keep your house cool.
Reduced Maintenance Costs
A new roof also comes with an added benefit to buyers–lower maintenance costs in the future.
A brand new roof hasn’t had to survive the trials and tribulations of the seasons yet. And that means it’s still operating at maximum efficiency.
When buyers move in, they won’t need to worry about roof maintenance for a while. And barring extreme weather events, they won’t need to worry about replacing the roof for several years to come.
That’s a big attraction to buyers. It also shows the appraiser that you’ve made a worthwhile investment in home improvement.
Does a New Roof Add Value to an Appraisal?
So, does a new roof add to your appraisal value?
The short answer: yes.
The long answer: yes, but.
Yes, it will add value to an appraisal, but you shouldn’t expect a dollar-for-dollar match.
In general, you can expect to recoup about 68% of the cost of a new roof in your home’s resale value. So if you spend about $21,000 to get a new roof installed, you’re only going to see about $14,000 of it in your appraisal
How Much Value Does a New Roof Add?
All told, how much value does a new roof add to your home?
It’s a necessary improvement and a worn-out roof will decrease the overall value of your home. When compared to other projects, installing a new roof does offer a relatively high return on investment.
But at the end of the day, you can’t get away from one simple truth: a house needs a roof.
In other words, when a buyer makes an offer on your home, they’re making it on the assumption that the house has a roof and that the roof does its job. It’s an essential component of the house, not an added extra. Plus, keeping the roof in good condition falls under basic home maintenance.
So if you invest in a new roof thinking that you can add the cost of the job directly into your sale price, you’re going to be disappointed. It will strengthen your home value since a leaking roof with mold issues will decrease your appraisal, but you shouldn’t expect a buyer to pay extra for a brand new, fancy roof.
Factors Affecting the Roof-Appraisal Relationship
Your appraisal isn’t a cut-and-dry process. You don’t want to sink so much money into a house that you’re ultimately losing money on the sale, but you don’t want to skimp on home improvements and lower your appraisal value, either.
The roof, like other components of an appraisal, involves a careful balance. Here are two things about your roof that will make the appraisal value go up (or down).
The first is simple: appearance.
Since a home appraiser looks at curb appeal when they assess your home, the appearance of your roof is actually quite important.
Remember, a buyer’s first impression of the house starts from the moment they pull up to the curb. The outward appearance of the house has an immediate psychological impact.
A home appraiser knows this. They also know that the roof makes up a significant portion of what a buyer sees.
If they see missing shingles, a dirty roof, gutters in dire need of cleaning, or a roof that’s otherwise in disrepair, they’re going to think that the rest of the house is this way. After all, if you can’t be bothered to maintain the roof, which literally keeps rain from falling on you while you sleep, you probably can’t be bothered to maintain the house in other areas.
Alternately, a new, attractive roof helps instill a sense of positivity. A new roof automatically nudges the buyer into thinking that the rest of the house is equally new, fresh, and appealing.
Another factor in the appraisal comes up after reviewing the info sheet.
Roof warranties often promise that the roof will last 20 to 30 years. But unless you live in a climate-controlled bubble without any major weather or temperature changes, you’re probably going to be disappointed around year 15.
Buyers know that even if a roof is brand new, they’ll likely need to replace the roof if they stay in a house longer than a decade. So the real question is when they’ll need to replace the roof and how long the warranty will cover them.
If you’ve recently replaced the roof, you get a fresh warranty on it. That’s great news for buyers, especially if you get an extended systems warranty, which will transfer over to the buyer when they purchase the home.
Factors Affecting the Roof-Appraisal Relationship
Knowing that a roof will boost your appraisal value, the next question is how much a new roof costs.
The exact cost of a roof will vary based on three things:
- Your location
- The size of the roof
- The materials used
You also need to factor in the cost of hiring a professional roofer. Unless you’re a roofer yourself, you could run into any number of issues while replacing your roof, from water damage to choosing the wrong materials for the pitch of your roof and having to start over.
With that in mind, the average homeowner spends about $7,634 to install a new roof, with a national range between $5,203 and $10,123. Certain cities with a high cost of living (like Denver or San Francisco) will automatically cost more, while cheaper areas (like Fargo, North Dakota) will have a lower cost.
When you work with a contractor, they’ll provide you a quote on a per-square basis, which takes into account:
- The price of the shingles
- Removal of waste
- Protective elements if you live in extremely hot or cold climates
For a roofing project, 100 square feet is a single roofing square.
How to Get the Most Value Without Breaking the Bank
Let’s say you spend $7,634 on your new roof. Since you can only expect to recoup 68% of that in the home’s resale value (or about $5,191), you’re still out $2,000 on the project.
And remember: you can’t build that $5,000 into the sale price of your home. Your house is supposed to have a roof, and the roof is supposed to do its job.
So when you set out to replace your roof, your goal should not be to invest in the fanciest roof on the market. But you shouldn’t replace it with the cheapest available roof either since cheap materials can cut down on your resale value.
Instead, your goal should be to find the best roof for the appraisal without breaking the bank. Here are a few things to keep in mind.
Cost vs. Value
Your biggest concern is a balance of cost vs. value.
A nicer roof will improve your appraisal value, but past a certain point, the cost of the project outweighs the benefits to your appraisal.
So you want a roof that’s good enough to give you a value boost but affordable enough to still be worth it.
Because of this, your best bet for return on investment comes from a mid-range roof.
Part of the cost vs. value debate has to do with the roofing materials you select for the project.
Some roofing materials are more durable than others, while some are more affordable. Common roofing materials include:
- Asphalt composite shingles
- Standing seam metal roofing
- Rolled roofing
- Membrane roofing
- Metal shingles
- Wood shingles
- Concrete tile
- Clay tile
- Slate roofing
Asphalt shingles are the most popular type of roofing in North America, as they’re generally affordable but can still stand up to the seasons.
Slate is the most expensive form of roofing tile, but it’s also naturally durable. Since it’s made of stone, it’s hardy enough to survive the weather, and every individual tile provides your home with a classy, beautiful look.
How to Choose Your Roofing Materials
So, how do you choose the right roofing materials for you?
First, take a look at other homes in your neighborhood. Your appraisal is based, in part, on how your house stacks up compared to similar houses in the neighborhood. So if you’re the only house in the neighborhood with a slate roof, it will probably price you out of the market.
If, on the other hand, everyone else has a relatively pricey roof, a cheaper asphalt roof will make your home look less attractive.
You should also take a look at the style of your home. A classic wood roof will look out of place on an extremely modern house, while a metal roof will look odd on a house will old-fashioned architecture.
You should also take a look at your price range. This is the easiest way to narrow the playing field to a few options. From there, you can make an assessment about which roofing materials are best suited to your house and neighborhood.
Here are a few questions that will help you choose your materials:
- Is the material available in a range of styles and colors that will complement your home?
- Does the material meet your area’s fire codes?
- How expensive is the material?
- What warranty is available for the material?
- Does the material perform well under the weather conditions of your area?
- Do you have any unique installation and maintenance considerations?
When in doubt, your roofing contractor can help point you in the right direction.
Match Your Market
This plays into an overall component of your roofing choices: always make sure to match your market.
Your market has two parts:
- The neighborhood you live in
- The buyers looking to move into your house
You could invest in the nicest roof available, but if every other house on the street has wood or asphalt, you’ll stick out like a sore thumb and it won’t help your resale value.
More importantly, the buyers you’re looking to attract may not be interested in the nicest redwood roof. If you’re selling a house in a typical middle-class suburb, your buyers aren’t looking for a redwood roof–they’re perfectly happy with an asphalt roof, or another roof comparable to the houses around you.
Do You Need a New Roof?
You know that a new roof can boost your home value. So the real question is: do you need a new roof?
If you haven’t replaced or updated the roof in several years, the answer is probably yes. Good news: we’re here to help.
We’re experienced Boise roofing contractors with a standing reputation for outstanding customer service. Better still, we’re proud to offer some of the best roofing warranties in the area. If you need to request an inspection or want to talk to us about your project, click here to get started.