For this blog update, we’re going to be going into a bit more how the appraisal report determines value for the homes, and what may increase a home’s value. For blog part 3, we’ll be discussing what happens when repairs are needed, the completion report and other uses for the house appraisal!
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How Do Appraisers Determine A Home’s Value?
Remember that for different loan programs, the appraisal report can make or break the process of buying a home depending on what the appraiser determines the home’s value to be. But in order for the appraiser to do that, he or she will need access to all areas, attics, basements, and crawl spaces in the home for observation.
The value of a home is determined by several factors: square footage, amenities, materials used to build or cost of rebuilding, and comparable sales. While there are different methods that appraisers may use, these factors are used in all methods of determining value.
How Exterior and Interior Matters
The exterior and interior of a home, including the lot, all have square footage values. The number of bedrooms and bathrooms in the interior of the home, the materials used for the home itself, and the size of the lot all help determine the value of the home. A home with a larger lot and more expensive materials will result in a higher appraised value.
Amenities and Comparable Sales
The amenities in a home can add a lot of value as well to a home. If there are any additional rooms in a home, like a basement, a den, or other amenities like a kitchen with a breakfast bar, these all add value to a home. A sun room for example, will also add value to a home if you are trying to sell your home.
A real estate appraiser will compare the home being appraised to several other homes that have sold in the same area within the last 2 years. These comparable sales are always similar properties, and the appraiser will use the sales price of these homes to help determine the value of the home being appraised as well.
Upgrades Can Add A Lot Of Value
And finally, any upgrades done to a home can increase the value as well. The value of upgrades typically is determined by combining the approach of appraising materials used and amenities of a home.
Any home that has more amenities than comparable sales will also result in a higher appraised value. An example of this is an extra bedroom or extra room that other homes in the do not have. If a homeowner decides to upgrade the amenities he or she already has, that can also increase the value of a home. For example, if the seller of the home decided to upgrade the materials in the kitchen, this will directly increase the value of the home by increasing the value of the kitchen.
For the next blog update, we’ll be discussing what happens when repairs are needed, the completion report and other uses for the house appraisal!
- 1 Minute | No Hard Credit Check
