Determining a home's actual value is no easy process. In fact, there are many factors that are taken into consideration when it comes to a home appraisal. The condition of the home is not enough. Instead, several intricate elements go into the process of determining a home's value, making an appraisal a well-calculated judgment.
One of the many components upon which a home appraisal is based is the neighborhood in which the the property is located. The determined value of the home varies depending on the types of homes that surround it (condos, houses, townhomes), their age and condition, and the proximity of the property to certain landmarks such as schools, downtown areas, parks, etc.
With that said, a home appraisal will also look at the downside of the area where it is located. Homes situated next to train tracks, city dumps, busy highways or poorly kept homes will generally receive a lower appraisal.
An intricate part of a home appraisal is what the real estate industry refers to as "comps" or a "Comparative Market Analysis (CMA)." Appraisers will look at what homes have sold for during the past six to 12 months in the same area as the home being appraised. This helps determine a more accurate value of each home.
Consideration of these comparables, which may also include homes currently on the market, will often include external photos of the homes being compared. Having this CMA in the appraisal helps to justify the price of the house being appraised. While this is an important component of the appraisal, in no way should a CMA by itself be used as the sole determining factor of an appraisal.
Condition of Home
Every portion of a home comes under scrutiny when it is being appraised. From the floors to the roof, an appraisal will give detailed information on just how much a home is worth. The condition of the home encompasses several factors, which include: number of bedrooms and bathrooms, age of the home, whether it has a garage or pool, home improvements, type of flooring and walls, and more.
Even the smallest details of the home will be in the appraisal, which helps determine a true market value. For instance, whether or not the walls are painted or if the home comes with appliances will affect the outcome. Another factor considered in the appraisal is the square footage of the home. Generally, the bigger the home, the more it will be worth.
Every positive thing about the home will increase the chances of a higher value.