Appraisals are tripping up as many as a quarter of home purchases these days. Here are top takeaways from the appraisers who reviewed properties for the recently concluded “Is Your House Priced Right?” contest.
Compare your house only to those of similar age and condition. Neighbors are rehabbing? It gets very complicated very quickly to try to add and subtract value once a house becomes very different from yours.
Local preferences rule. Your house doesn’t have central air conditioning…in Florida? Your condo doesn’t have walk-in closets..in Los Angeles? Local preferences will put your house on the ‘must see’ or ‘never mind’ list for buyers. If you think your appraiser has underestimated the value of certain amenities (Hot tubs in Marin County? Terraces in Manhattan?) request a review of those points.
‘Functional obsolescence’ will drive down the value of your house. What was new and hot 20 years ago isn’t so much any more. If your house has eight bedrooms and most neighboring houses have up to four, you are not going to get much extra value out of the extra bedrooms.
Overly defined spaces limit value. Adding a separate office adjacent to a new garage is smart. Even smarter is adding a full bathroom. Now the office is self-contained, and could be used as a studio, guest suite or even an in-law suite. The more flexible the space, the higher the appraised value.
Foreclosures must be counted. Appraisers can’t overlook relevant foreclosure sales just because they are foreclosure sales. Until foreclosures clear the market, they will be in the mix.
You are in lockstep with your neighbors. When a neighboring house sells, the parameters for the value of your house narrow. The more recent the sale, the more indicative that sale is of your home’s value. Don’t try to fight it. You won’t win.
