March 26, 2024

Appraisals examine every nuance of home valuation

When a home in the neighborhood sells for an impressive sum, it is not unusual for you to believe your own home will attract a similar offer.

Unlocking a home’s true value is much more than a one-size-fits-all formula. It requires the complex, nuanced evaluation of a professional property appraiser.
Numerous factors are considered and understanding these intricacies is crucial for buyers and sellers.

Comparable properties, or "comps," in the area play a significant role. Comp properties need to be as similar as possible in location, size, age, condition, and other relevant factors. The more similar the assets, the more reliable the valuation.

The appraisal also includes an examination of the familiar fundamentals - square footage, number of bedrooms, and lot size.

Not all square footage is created equal. Appraisers usually exclude areas like attics, garages, and unfinished basements. Though many homeowners may use these rooms for work, recreation or even living space, they are usually not counted toward the total.

Remodels or upgrades like new appliances, fixtures or flooring can raise a property's value. Appraisers assign scores, favoring recent renovations and newer builds.

Mechanical and utility systems also factor into the equation. Energy-efficient upgrades reduce utility bills and appeal to potential buyers, enhancing property value. On the flip side, outdated features like popcorn ceilings, wood paneling or shag carpets can adversely affect the appraisal.

A property's climate resilience also affects its value. Across different regions, protection from certain weather conditions can be a key element. For example, flood mitigation features can affect the appraisal of homes near the water.

County lines, city limits, and school district boundaries can also become key issues. It is not unheard of for a house across the street from the appraised property to fall into a different school district, which can cause a significant variation in value.

According to a recent poll of housing experts, annual national home price growth is expected to be 2.4% in 2024 and 2.7% in 2025. Amid fluctuating mortgage rates, understanding the factors influencing home prices is more critical than ever.

Be aware of variations among appraisers. It is important to work with professionals who understand market dynamics, as a lack of local knowledge can result in inaccuracies. By gaining insights into these details, buyers and sellers can make more informed decisions.