December 29 , 2016
How do home appraisers determine value? The answer is more complicated than you might think. There is a good reason why home appraisers are required to be trained and licensed professionals. Of course, if just anybody could appraise a home, some dishonest home buyers would choose someone who would place far too high of a value on their home.
Still, perhaps the main reason appraisers require training is that they must be knowledgeable, taking into account many factors when making their judgments.
Size and location are the two most important factors in determining the value of a home. People want large homes, even if they don't need that much space. People also want homes in safe neighborhoods, and they want to make sure there are good schools in the area (if they have kids). All of these factors play into the final appraisal of a home, but they don’t matter as much as the home itself.
While the location and size are significant parts of a home's appraised value, there is much more to appraisal of the house itself. Contrary to popular belief, an appraiser will not reduce their appraisal figure for a dirty or messy house. However, there are many other seemingly small things that can drastically affect the value of the home. For example, the size of the lot matters a great deal. Obviously, a larger lot is better. If the home is in a neighborhood with a wide variety of home sizes, the lot size will be an area of interest when the appraiser is looking at comps. The ratio of unfinished space to finished space is also important; the more finished space, the better. The appraiser will carefully inspect any improvements made to the home to determine soundness and suitability.
Another important factor when determining the value of a house is the style and age of the structure. A smaller house may even have a higher appraised value if it is newer and of a more fashionable style than a larger house. Which style of house is in vogue changes from year to year and is different in every area. As a general rule, the newer the house, the better as far as the appraised value goes. However, there are exceptions to this. Some older houses are desirable, especially Craftsman houses. In fact, for very old homes, original features still intact and in use can drive up the value a great deal. A good appraiser will take all of this into account when coming up with a value for the house. Interested in finding out what a piece of real estate is worth? How do home appraisers determine value? We are happy to explain the important points to you. Contact our team of business valuation experts at Burns Valuation today; we are ready to take your call at 678.235.4616.