I’m sure you’ve heard the question, “What are the first three rules of real estate?” The answer that many real estate professionals will tell you is “Location, Location, Location.” While this may be true, when it comes to valuing your home, appraisers typically use comparable homes with similar locations. When the comparables have similar locations, what else factors in to a home’s value and differentiates the value of one home from the next?
Living square footage:
Several factors come into play when valuing a home. One of the most important features of your home that affects value is the living square footage. Basically, the more living square feet you have, the more your home is worth. There are some instances where a home can be over-built and have too much square footage. However, most of the time, the more square footage you have equals more value.
Renovations and updates:
Another factor that can increase the value of your home is updates. Renovations can improve both the quality of your home and the condition of your home. I have seen investors purchase old, outdated homes and completely renovate them. Originally the homes would have linoleum and carpet flooring, wood paneling walls, formica counters, stock built cabinets, etc. After renovations, the homes have wood and tile flooring, sheetrock walls, granite or quartz counters, custom cabinets, etc. So, the renovations not only improve the condition of the homes (new materials) but the quality of the homes too (higher end finishes).
Other important factors:
Several other factors can affect the value of your homes: lot size, views, bedroom and bathroom counts, covered parking, amenities, etc.
Ultimately, the local market decides what factors influence the value and by how much. It is important to have the assistance of a local real estate professional to analyze the market and to determine which factors are/are not important in your market area. If you are considering buying or selling a home and want a reliable opinion of value, contact me at 337-254-2215.
Lane Duplechin, AGA
Candidate for Designation with the Appraisal Institute
One thing that I hear sellers say often is, the house down the street sold for “X”, therefore the value of my house is worth “X”, or something very close to “X”. While this statement could hold some truth in a newer cookie cutter subdivision, it is almost never true in most other subdivisions. Even in an older cookie cutter subdivision this statement most likely would not be true. The condition of a house has a big affect on the value of a home. Homes suffer different degrees of depreciation based on how a home owner maintains the home and the kind of updates that are made over the years. What if the home down the street has been remodeled? Instead of having the original tile or formica counters and tile and carpet flooring, maybe the owners updated the counters to granite, replaced the original floors with wood and new ceramic tile, and updated the bathrooms. So if your home hasn’t had any updates, then it most likely would not have a similar value to the home down the street, assuming that all other features are the same. Likewise, the house down the street may have been neglected and is in poor condition. Do you still think your property is worth the same as the one down the street? Probably not!
In a more custom built subdivision, your property most likely has other differences from the house down the street. Maybe your living square footage is significantly larger/smaller, the lot sizes could be much different, and/or the quality of your home could be superior/ inferior to the house down the street. Other differences include number of bedrooms and bathrooms, the type of covered parking (carport vs. garage), or the amenities that come with a property (covered patio/porch, fence, storage buildings, workshops, outdoor kitchen, pool, etc.) The living square footage, often referred to as Gross Living Area (GLA), is one of the most important characteristics that affect value. If the house down the street is 500 sf larger then yours, then this property might be worth a lot more than yours. If your property has a much smaller lot size than the property down the street, wouldn’t you think that your property is worth less? All of these property characteristics could play a role in the value of your home. They need to be analyzed by a professional to determine what kind of effect on value they have.
The truth is, is that every property is different and every market is different. If you are thinking of listing your property for sale, it is important that all of the relevant characteristics of your property are analyzed by an expert in your market. A certified appraiser has the training, education, and experience necessary to provide you with an accurate value of your home, which gives you a valuable tool in listing your property and in your negotiating efforts once the property is under contract.
How can we help?
If you have any questions or would like to get a free quote for your appraisal, give us a call at 337-254-2215 or reach out to us here: