When you are buying or selling a home, one of the first items to consider is the value of the property. Sellers want to get the highest price possible, while buyers want to be confident their investment is sound. In addition, mortgage lenders use the appraised value to determine if the requested borrowed amount is on point before you sign the closing papers at your Omaha title company. Since home values vary drastically throughout the United States, completing an official appraisal is the best way to ensure the home is priced right.
Determining the value of a home is a challenging task. While there is some science behind the calculation, there is also a “gut” feeling that comes with experience and understanding of the local market. Here are a few focused areas that home appraisers use when calculating the actual value of real estate.
They completed a fact-finding mission to compare similar homes in the area.
You have likely heard of the term “comps” regarding real estate values. This is the abbreviated way of discussing the process of comparing homes in the local area. Professional appraisers and real estate agents complete detailed research to gather an understanding of homes previously sold or currently listed for sale. They will compare the location, size of the home, condition, and any added benefits to similar homes that have sold to the home they are appraising. This research will give them a solid base for where to begin developing a price. They will then dive into the details of the home they are appraising to adjust their calculations where needed.
The condition of the home may change the value.
Most people do not want to purchase a home with a long list of needed repairs. A house’s value may be adjusted down if it is not in good condition. An appraiser will review the state of the roof, electrical system, plumbing, landscaping, and the house as a whole to best understand the condition. Each project that must be completed will cost a potential buyer additional money after they complete the closing at their local Omaha title company. An appraiser will recognize that and adjust their estimated value based on those projects.
How was the home designed and constructed?
A home can be constructed in many ways. Designers work beside contractors in most home builds, and the two professionals blend design and function. In today’s world of the tiny home explosion, we can really begin to understand the value of good design with various construction materials. When an appraiser calculates a home’s value, they look at both design and construction elements. They will evaluate things like the list below to assist in calculating the value of the property.
- The overall design of the home and how it fits into the surrounding area
- The building materials used to construct the home
- The type of foundation on which the house sits upon
- The size of the home, including number of bedrooms and bathrooms
- Is there additional livable square footage in the basement?
Some factors could decrease the value of the property.
Have you ever signed the closing papers at your title company and almost immediately regrated this decision once you arrived on-site due to an unexpected issue like sound or smells? During the appraisal process, the appraiser will evaluate the negative aspects that could cause the value to decrease compared to other houses in the area. There could be a highway nearby that limits any outdoor time because of the noise. It may be determined that a beautiful piece of property was once a landfill. These types of things tend to cause buyers to rethink the purchase of a home and could therefore decrease the appraisal value.
Special features may increase the value of the property.
Just like certain elements could cause a decrease in appraisal value, some things that could increase that critical final number. The home may have been initially built for a chef and have a high-end custom kitchen in place. Parents may want to live in a particular school district, and the type of home is not important to them. Buyers may be looking for a mountain home with off-grid features, and if your property has these, it would be set apart from others. While not all things that you think are a feature actually are, many elements could add value to the property. A professional appraiser will know which things add value to a property and which ones do not.
Getting a solid appraisal is one of the first steps in buying or selling a home. Knowing that you are getting the most value from the transaction will give you the confidence to move forward. When it comes time to take the final steps, be sure you have a high-quality Title Company to complete the transaction.