When you buy a home, your lender will require an appraisal, and even if you’re paying cash, you should have an appraisal done to make sure you’re not overpaying. It’s a good idea, then, to know how appraisers determine the value of South Florida properties. An appraisal is an unbiased (supposedly) estimate of what the home is actually worth. It does include a subjective element, but appraisers use an objective process to arrive at a pretty accurate assessment of value. In general, appraisers look at recent sales data for similar properties, the condition of the property, and location.
What Appraisers Look at to Determine Value
Appraisers determine the value of South Florida properties primarily on the basis of the market and the condition of a property. And that “condition” involves construction and maintenance matters, such as:
The very first things an appraiser will examine are the fundamental aspects of a home’s construction – the foundation, the walls (especially with respect to solid framing), and the roof. The appraiser will be looking for any defects or damage to these basic construction components to ensure that the mortgage lender is lending on a property that has the requisite equity.
Lot size and the home’s square footage also help appraisers determine the value of South Florida properties. Obviously, larger lots and larger homes are worth more, but mere size doesn’t tell the whole story. A larger home with more bedrooms and bathrooms will be worth more than a similar sized home with fewer of these rooms.
CONDITION OF INTERIOR
What’s on the inside, especially inside the walls, matters as well, nearly as much as the basic exterior construction aspects. Here’s what appraisers look at on the inside:
- Bathroom fixtures
- Kitchen appliances
In addition, appraisers determine the value of South Florida properties based on the number and quality of improvements. These value-increasing improvements include such things as a bathroom remodel, kitchen update, new floors, new appliances, and installation of a new HVAC system. These updates contribute to the property’s lasting value and so are attractive to both lenders and buyers.
Appraisers will also factor in any extras when calculating market value. These extras can be anything from a pool to a deck to a security system.
The Process of Determining the Value
Appraisers determine the value of South Florida property using a fairly standard and objective process. And the main tool for calculating the actual market value (after looking at all the aspects mentioned above) is the comparable sales price approach.
Basically, an appraiser uses market data for the homes that are most like the one under consideration, that are close by (preferably in the same neighborhood), and that have sold recently. Ideally, the data will be for homes that have sold within the last three months, with more recent being even better. And the homes used for the comparison must be the most similar to the one being appraised, for example, having the same square footage, the same number of beds and baths, and similar construction. But the appraiser will make comp adjustments for any differences.
Comparing one home against similar ones in the are that have sold recently will give the appraiser a pretty accurate idea of what market value is. But, again, age, location, condition, updates, and amenities all factor into the determination of market value as well.
And that’s how appraisers determine the value of South Florida properties. Still, there’s more that goes into it – especially such subjective matters as soiled carpets and odors – and you can even challenge an appraisal you think is too low.