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Seven Factors That Influence Your Home’s Appraisal Value

Understanding the value of your home is crucial, whether you’re planning to sell, refinance, or simply want to know where you stand in terms of your investment. An appraisal is more than just a simple calculation of your property’s square footage and price per square foot. In this post, we’ll explore some of the factors considered during a home appraisal, helping you understand what can influence your home’s value and loan eligibility. This knowledge can empower you to make informed decisions and potentially boost the value of your home.

1. Location

Location is a fundamental factor in determining your home’s value. The median value of surrounding homes, a high-demand neighborhood as demonstrated by how quickly homes sell, and the overall topography and views of a property can all impact the land value.

2. Home Size and Usable Space

The size of your home, including the number of bedrooms and bathrooms, significantly impacts its value. For example, a three-bedroom home in the same neighborhood will typically be worth more than a two-bedroom home. However, the usability of the space is also important. A smaller home with an open, efficient layout may be more valuable than a larger home with a choppy, inefficient floor plan.

3. Age and Condition

All other things being equal, newer houses typically sell for more than older houses. But due to the high cost of construction in Alaska, the condition of a property often has a more significant impact on its value.

4. Home Improvements and Renovations

Renovations can increase your home’s value, but the return on investment varies. A modern, updated kitchen or finished basement can significantly boost your home’s value. On the other hand, a high-end renovation that is out of character with the rest of the neighborhood might not yield a high return.

5. Market Conditions

The state of the real estate market in your area can influence your home’s value. If you’re in a seller’s market with high demand and low inventory, your home’s value will experience some upward pressure. Conversely, in a buyer’s market with high inventory and low demand, your home’s value could be affected downward. In a typical year, this can even be seen as a micro trend where properties often sell for slightly more in the summer, but could have less inventory competition in the winter.

6. Highest and Best Use

The concept of “highest and best use” can influence your home’s appraisal value. For instance, if you have a detached studio that functions independently, it may sway the overall property to be considered a duplex rather than an additional bedroom. In this case, an appraiser may consider comparable duplex properties when determining your home’s value, which could either increase or decrease the appraisal value depending on if duplex properties are in high demand.

7. Safe, Sound, and Sanitary Concerns

Most loan programs will require the correction of any issues related to the safety, soundness, and sanitary condition of the property. Safety deficiencies could include missing railing, lack of safe bedroom egress, or exposed electrical. Soundness issues could be evidenced by defective paint, irregularity of the foundation, signs of water damage, or any non-functioning utilities. Issues like excessive clutter with biological matter, excessive pet odor with signs of animal waste, and wet basements with potential evidence of mold, can all negatively impact a home’s eligibility for a loan and/or its appraisal value. Ensuring your home is safe, sound, and sanitary can help ensure the transaction process is not delayed.

Understanding these factors can help you make informed decisions about home improvements and prepare for your appraisal. Remember, the goal of an appraisal is to provide an accurate representation of the most likely fair market value for your home. As a homeowner, you have the ability to maintain and improve your property to maximize its value.

If you’re in need of expert appraisal services, don’t hesitate to contact us. We’re here to guide you through the appraisal process and answer any questions you may have.

Debunking Myths About The Appraisal Process

Navigating the real estate market can be a daunting task, especially when it comes to understanding the appraisal process. There are numerous misconceptions about our profession and the appraisal process we have encountered over the years. Here are some of the most common misconceptions and our attempt to provide clarity around this often misunderstood profession.

Myth 1: Appraisals and Inspections Are the Same

Contrary to popular belief, an appraisal is not the same as a home inspection or engineer inspection. An appraiser is a valuation specialist whose job is to prove an evidence-based opinion of the most likely value of a house based on factors such as location, improvements, and current market trends. A home inspector or engineer is a building science specialist who focuses on the condition of the home and its major components.

Myth 2: Appraisals Are Solely Based on the House

While the physical attributes of a house play a significant role in its appraisal, other factors affecting the location value also influence the overall value. An appraisal is a snapshot of your home’s value at a particular moment, considering all these factors.

Myth 3: Home Improvements Always Increase A Home’s Value

While some home improvements can increase the value of your home, others may not have the impact you expect. For instance, the market may not be willing to pay dollar for dollar what it costs to install high-maintenance landscaping, an oversized shop, solar panels, or any other highly customized feature; no matter how much it is loved by the current occupants. Routine care like upgraded utilities, a new septic system, or a recently serviced furnace is expected and may not significantly increase the value of your home.

Myth 4: The Appraised Value Should Match the Sale Price

The appraised value of a property may not always match the sale price. The appraised value is an impartial estimate of the most likely value of a property given normal conditions and neither the buyer nor the seller are under duress. This is different from the sale price which is the amount to which a specific buyer and seller agreed. Although the sale price is one data point an appraiser considers, it is not the only data point, and one buyer does not necessarily represent the overall market.

Myth 5: Appraisals Are Owned By The Payer

Although you may be paying for the appraisal, the document is legally owned by the direct client of the appraiser, typically the lending company in the case of a transaction. However, under the Equal Credit Opportunity Act, home buyers must be provided with a copy of the document upon written request.

Myth 6: Zillow Is As Accurate As An Appraisal

Online estimations like Zillow’s Zestimates are unlikely to provide an accurate estimate of a home’s value. These estimates are based on publicly available data and algorithms built for homogeneous cities in the Lower 48, neither of which relate well to our unique real estate market. An appraisal is conducted by trained professionals who physically inspect the property and understand local market trends.

Myth 7: An Appraisal Is Only Necessary for Lender-based Transactions

While appraisals are often associated with buying or refinancing a home, they can serve other purposes as well. Appraisals can be useful for tax assessments, legal disputes, estate planning, and more.

Understanding these myths can help you navigate the real estate appraisal process with confidence. If you have more questions or need an expert appraisal, don’t hesitate to contact us. We’re here to help you make informed decisions about your property.

The Indispensable Role of a Real Estate Appraiser

In the world of real estate, the role of an appraiser is often misunderstood or overlooked. However, their contribution is vital to the smooth functioning of the real estate market. A real estate appraiser is a certified professional who provides market-based evidence as to the value of a property. As the only neutral party involved in a real estate transaction, their unbiased valuations ensure fairness and transparency for all parties involved.

The Appraiser’s Role: Unbiased Valuation

An appraiser’s primary role is to provide an unbiased opinion of a property’s value. They do this by inspecting the property, determining what makes that home unique, comparing it to similar properties recently sold, making market supported adjustments, and explaining how the final value opinion was concluded. This process involves a deep understanding of hyper-local markets, statistics, and analytics.

Appraisers are the only unbiased party in a real estate transaction. Unlike agents and loan officers, whose salaries are based on the loan closing or home selling, an appraiser’s payment is not contingent on the transaction’s success. This lack of incentive to push a deal through allows appraisers to provide a voice of reason in the process, ensuring that the property’s value is accurately represented.

The Appraiser’s Impact: Consumer Advocacy and Public Trust

Appraisers act as consumer advocates, providing independence to the valuation process. They ensure that the financial position of the lender is balanced with the buyer’s need for an accurate market value of the property. This role is crucial in building and supporting public trust in our financial system. By providing reliable and accurate appraisals, appraisers help consumers feel confident in the home buying and mortgage loan process.

Choosing the Right Appraiser

Choosing the right appraiser is a critical step in the real estate transaction process. Here are a few tips to help you find the right professional for your needs:

Check for State Certifications: The appraiser should be a Certified Residential appraiser or Generally Certified appraiser. Being vetted as a VA roster appraiser and FHA roster appraiser are also good signs.

Consider Their Knowledge: The appraiser’s dedication to continuous learning, above and beyond the minimum required to keep their certification, is vital. As real estate markets, technology, and the availability of big data change the landscape of valuation; you want an appraiser who is staying up to date with these changes.

Review Their Online Presence: Check the appraiser’s business reviews, website, and LinkedIn profile. If you see a business with a high number of positive reviews, an informative website, and a well-connected professional account; these are strong indicators of reliability and high service demand.

Conclusion

Whether you’re a homeowner, realtor, or lawyer, understanding the role of a real estate appraiser is crucial. Their unbiased, objective valuations provide the foundation for fair and transparent real estate transactions.

If you need a reliable, experienced appraiser, don’t hesitate to reach out. We’re here to provide you with accurate, trustworthy appraisals that will help you make informed real estate decisions.