Appraisals.  Whether you buy, sell, refinance, or just wonder how much equity you have in your home, the answer to the question:  How does an appraiser form an opinion of the value of my home?  is important.  An appraiser takes several factors into consideration when assigning a current value to your home.  Here is a list of some of the most important:

1. Recent comparable sales of homes that are similar to yours.  This includes homes in your neighborhood and other nearby neighborhoods with similar age, square footage, design, bedroom and bathroom counts.  If no homes have sold recently in your area, the appraiser will have to find comparable sales which are farther away in distance and time.

  2. Size.  In a given neighborhood, larger homes typically draw a higher sales price than smaller homes.  More living space, more land, higher bedroom or bathroom counts, bonus rooms and basements all add to a home’s value.

3. General sale-ability. If your home has a great design, awesome curb appeal and superior landscaping and care, it will appraise for much more than a home with an off-beat design, poor functionality, or a difficult setting.  An appraiser will recognize these factors when evaluating your home and will adjust the market value accordingly.

4. Building materials. The quality of construction and type of building materials has, well, a material effect on your home value.  A well-maintained home constructed with high quality materials is more desirable at resale time and will draw a higher resale price than a home with lesser quality components.

5. Location is often viewed as the most important factor in a given property’s value.  Schools, neighborhood, proximity to amenities and other desirable areas, and use of surrounding land all play a role in determining your home’s value.

6. Condition of your home, inside and out.  Age, updates, attention to maintenance and repairs factor into the value of your home.

7. Zoning.  Homes which have non-residential zoning are usually worth less than similar homes in standard residential zones.  Zoning affects your ability to sell and the likelihood that other non-residential structures may be built nearby.  Zoning may also affect your ability to rebuild if your home is destroyed – a major factor in determining the value of a home.

8. Cost to rebuild.  Surprisingly, cost to rebuild is one of the least important factors when an appraiser assigns a value to a home.  While your insurance company is keenly interested in the cost to rebuild your home and what they might have to pay in the event of a catastrophic event, your bank is much more interested in the potential sales price of your home.  Since most appraisals are conducted with bank lending guidelines in mind, comparable sales are given more consideration than cost to rebuild.

Bonus:    Q: What easy rehab item can add some of the most value on a percentage basis at resale time?  A:  A new front door.






Kent Cochrum, Senior Loan Originator

  NMLS #194755

(630) 330-1334   mobile

(630) 634-5136 office

CIBM Mortgage, a division of CIBM Bank , member FDIC

330 S. Naperville Road, Wheaton, IL 60187

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