What counts; what doesn't?

[homebuyer]

I agree with several of you that the general public (which includes me) doesn't really understand the appraisal process. I've received conflicting opinions (all from people not trained in appraisals) about what counts and what doesn't in regards to the value of a home.

Below are features that I think (in my untrained mind) should count towards the value of a home. Some people (again, not appraisers) have agreed. Some haven't. I'm curious to see your expert opinions on each of these. Do they count? Do they not?

1. moulding
2. new paint inside
3. new paint outside
4. stainless steel appliances
5. new appliances
6. range hood in kitchen
7. solid wood floors
8. marble floors
9. cathedral ceiling
10. new carpet
11. paved driveway
12. central vac
13. cleanliness (overall)
14. professional landscaping
15. brick pavers on walkway
16. new windows
17. double insulated windows
18. double shower heads
19. built-ins (shelving, window seats, etc)
20. track lighting
21. recessed lighting
22. square footage
23. amount of bedrooms
24. amount of bathrooms
25. pedastal sinks

 

[Marcia Langley]

homebuyer,

Individual amenities like those you listed will not affect overall value much as stand alone items. Taken together as a whole, they could.

But the overwhelming value affecting factors are location, quality, condition, and size.

Appraisers have to find comparale houses that have closed sales. When we say comparable, we mean the most similar in location, quality, condition, and size.

Oldfashioned versus modern floor plans and decor could also have an impact.

If your house is fairly new and in a subdivision of other fairly new houses that are very similar, then when those neighboring houses have sold recently they will likely be the most similar and sales to the subject property.

But if your house is a new house in an old subdivision of smaller, less quality houses, the location could drag the price down.

In other words, the items you mentioned would not be a factor by themselves.

You could have a granite counter in an otherwise unupdated old house in an old neighborhood and still have the cheapest house in the neighborhood.

The list you posted might be a realtor's list of the sorts of items that please the potential buyers. But you would never see an adjustment, for example, of a pedestal sink, in an appraisal. There is no evidence that a house will sell for more just because it has a pedestal sink.

 

[toddmallard]

22, 23, 24, Thats it if all things are equal. What would be the difference if 1 house had new paint inside and the other had older paint with no stains?. maybe the new buyer does not like the color scheme. I understand what you are trying to say here. Unfortunalty most things listed are for your enjoyment, Thats it.

 

[Mountain Man]

1, 4, 7, 8, 9, 12, 14, 15, 19, 20 are things typically found in upper range homes. Individually they may not add a specific value, but collectively they are what is expected in an upper range home. So with an the absence of similar features, the market buyers will chose the competition (substitution). The whole principle of real estate is based on substitution... if I can't have this, what can I have in the same price range.

As for paved driveway and landscaping, I do see where that has an effect on value in more suburban areas. But in more rural areas, the market participants just don't seem to care. They are looking more for land, view, and privacy than a paved driveway or landscaping. So again, it comes down to market forces and substitution.

New painting, new windows, new appliances, etc. Those things do seem to help in older homes that need to be updated and modernized. But, the cost doesn't always equal value. You can easily over improve a house while remodeling. Would you put $6000 worth of stainless steel appliances in a $90,000 A frame built in 1975?

 

[Walter Kirk]

The most important factor is one that you did not mention and that is location. After that is the specific site. Overall size of the improvements, quality of the improvements and condition of the improvements follow in importance.

 

[Kevin Pennick]

All of the items indicate that your home has been well maintained, but how do the others in your area stack up? Are they equally or similarly taken care of? This to me would compel my rating of average, good, above average. Like Todd, items 22,23, 24 are the most influential.

 

[Bill_FL]

Homebuyer -

Yes, they all count for something, but how they count differs at the several different market levels. Upgrades like marble floors, hardwood, crown molding, stainless appliances are often considered as part of the quality of construction of a home. Now, let’s say that the home you are looking at is in the lower market segment of your area. For fun, let’s say those are $75,000 - $85,000, 900 square foot, 2 bedroom 1 bath bungalows built in the 1920's. All of those upgrades may be over-improvements for that type house. In that case, there maybe be some additional value for them, but no where near what it would cost to put them in.

Now, look at the flip side. Let’s say you are looking at a home in the very upper end of your local market and just for fun, lets say these homes are in the $500,000 - $750,000 range. The buyers of those homes would expect to see all of those features you mentioned all ready in the home. Now, if you went into a home that did not have them, but had a lower quality level of finish, the lack of those items might penalize that home by far more than the cost to put the items in. Why? Because the typical buyer expects them. If they have to put them in, they want an incentive to do so. Let’s say it would cost $25,000 to bring the house up to market levels. That buyer might decide that if they have to spend $25,000, they want to make an additional $10,000 for their efforts. This would make the “penalty” or loss of value $35,000 for $25,000 worth of upgrades.

Unfortunately, there is no magic list of what each item contributes. Contrary to those TV shows that say adding granite counters will bring your $5000 at sale, and a bathroom will give your $25,000, there is no such set number. Each property and market are different. We have to look at what the typical buyer expects from the house/type of property we are appraising, then measure small differences for items that are present or not present on our subject vs. our comparable sales. This is typically not done item for item as you have presented them. Lets say one house has Formica type kitchen counters the other granite; but the first house has hardwood floors while the second has laminate wood. These type items are generally considered in a cumulative manner in "quality".

Hope it helps. Lets us know if we can provide more information.

 

[Mztk1]

You are going to get different answers from non-professionals because the right answer is, It depends on the market.