Factors that Affect a Home Appraisal

Factors that Affect a Home Appraisal

How an Appraiser Values Real Estate

Everyone wants a fast sale and to get the best deal when doing any real estate transaction. One of the single largest influences on how quickly a property sells and for how much – is the listing price  But regardless of the listing price, when a property goes under contract with an accepted offer, the home will usually still be appraised.  

Almost every home sold is done so with a mortgage.  Anytime a bank is putting their money up to finance the home, they will require  an appraisal. The appraisal makes sure the buyer and seller both have another statement of value, and that the bank is protected by not over-loaning on a property not worth the price.

Although there are many pitfalls that can send a real estate transaction to hell in a hand basket, the two most common reasons that real estate deals fall apart are the property inspection and the appraisal. 

Principles of Value

There is little doubt that technology has substantially changed real estate.  Even with the modern technological advancements and trends in real estate, there are still the basic principles of value that have existed for decades.  Value is a very specific real estate term with a very defined definition. These principles will guide an appraiser during an appraisal to make sure they arrive at the correct valuation.

The basic principles of value include”

  • Anticipation
  • Progression
  • Regression
  • Balance
  • Substitution
  • Demand supply and desire

Essential Elements of Value

Additional Factors of Value

Apart from these principles, here are some of the factors that every property appraiser should consider when carrying out a property valuation.

Size Of The Property

When selling your house, you will be selling both the house and the land it is attached to (except for property like condos and mobile home communities, but we’ll save that for another story). Therefore, both the size of the land and the house itself will be evaluated to know the value of the entire property. The bigger the size of both, usually the higher the value. Usually, the size of the house is measured in square feet, and the greater the floor space, the more it can be worth.  A common real estate metrics is getting the living square footage and multiplying that by the listing sales price to come up with Dollar per Square Foot or $/Sq.Ft

Attributes Of The Property

Any person interested in buying a new home will consider some features such as its shape, topography and other aspects that matter most to them. A real estate appraiser understands the importance of some property attributes over others and therefore will consider each when valuing your home.

For instance, if you aspire to sell a home that is situated on the high side and has a clear view of the water, your property will be valued higher than those located on the lower side of the street. However, if the house does not have a neat shape, it might score low points regardless of it being situated on an elevated ground.

The Frontage Of The Property

The distance between the property and the road matters a lot to property buyers and sellers. The house that has double or huge frontages tend to have a higher value than those with a small distance in between. However, the width of the frontage should be consistent with the standards applied in that particular area to avoid it looking odd from others.

Property Layout

If you want to buy a home, its layout and presentation are one of the things that you might be required to consider. For instance, the service area and bedrooms in the house should be grouped separately rather having a guest toilet near the master bedroom.

The grouping of various zones in the house needs to be creative, neat and reasonable. An appraiser will therefore consider the condition, comfort, appearance and privacy that the property will provide to the buyer and based on its presentation, he might rate it high or low.

Number Of Rooms

The number of rooms affect home values
More bedrooms generally bring a higher property value

Most home buyers will prefer a home with more and spacious bedrooms. Generally speaking, additional bedrooms add value to a home. However, the more bedrooms there are, the more bathrooms that will be required because you cannot have a six-bedroomed house with one or two bathrooms. An appraiser will also evaluate the impact of all additional rooms because you might end up compromising the overall space in the house.

Location Of The Property

Accessibility to different amenities such as hospitals, shopping centers, recreation places, schools, public transport and retail stores among others will determine the worth of your property. The easier it is to access them the higher the valuation could be.

An Appraiser will also consider the quality of infrastructure surrounding the property. However, if the property is situated in a place near a manufacturing company, an airport or any other facility that may cause health issues or noise pollution, the value will go down.

Possibility Of Development

Future Real Estate Development has a huge influence on current property values

Despite that a property appraiser focuses on a property’s condition as it is today, the property might score higher points if it has room for expansion or development without compromising its current state. One of the ways one can redevelop a property is by adding an extra floor, which allows a homeowner to enjoy the water view. However, having unfinished kitchen or windows will not be impressive to the appraiser or the Realtor.

If you want to buy a home or sell any property, you should work with an experienced Realtor for better assistance. They will have connections and referrals for reputable property appraisers and other top real estate professionals as needed during your home buying or selling venture.  

Leave a Reply

Your email address will not be published. Required fields are marked *