How much do these upgrades add to the value of a house? (renter, buyers)

[HX_Guy]

SMG: How accurate is the Comprable Properties Report in MLS to actual appraisals in your experience?

[SMG]

First and foremost, i did not mean to hijack this...that is a very beautiful property. I just take exception in a big way to owners and agents telling me how to find comps, where I need to be value wise. It is wrong, it is leading and I do not participate. Rant over.


HX Guy, you can get good ideas, but it leaves much out that can impact values....many factors involved that are not captured there...

[azriverfan.]

In my very limited knowledge, I will say this based on my personal experience: people generally want the same things. We as people tend to think what we want is unique but it's not. If it's a house you are looking for and like, chances are a lot of other people will like it too and it will be in demand. I've never found a house that met my specifications that didn't have a lot of competition. Likewise, when I've sold homes, I've had a lot of offers immediately. Whenever I see a house that hasn't sold or has a seemingly crazy good deal, there is usually a reason why. In my experience both as a buyer and seller, if you make your house "tight", it will sell for beyond appraisal. Buyers know a tight house and they will make bids. People tend to like modern style homes. They like little things like misters, epoxy in the garage, water softeners, neutral paint, tile floors, granite or stone counter tops, dark wood cabinets, stainless steel appliances, ceiling fans, ceiling lights in all the rooms, custom closets in multiple bedrooms, pool with a nice deck, putting green in the back, clean neat landscaping that's not too maintenance...those things appeal to people and if it's already in a home, people will compete for those homes. Yeah, people could buy a house and put that in themselves but it's a pain in the #@#@ and they would rather just buy it. I love what you did with the bathroom and that will definitely appeal to people.

Again, I realize my advice is more anecdotal and hardly objective or scientific but take it for what it's worth. Remember that buying a home is largely psychological particularly for a non-investor who plan on living in the home. They tend to make emotional decisions and will pay for what they feel a house is worth.

[MN-Born-n-Raised]

Originally Posted by SMG

I am in the biz. I value a lot of properties for lenders and owners and have for many years. When a property owner or agent tries to lead me, tell me what kind of comps to use, it is quickly dismissed. I find it offensive that you would think I "dig for the highest comps" to get you your highest value.

The reality is I could hire 10 people in your industry and get 10 different answers on what a home is worth. Like any industry, there are some worthless appraisers. Lazy, not able to appreciate the value of specific items, picking bad comps, etc. In the old days, they got sorted out because no one would hire them. Now, the seller (and buyer to a lesser degree) is at the mercy of who is picked. I hate those odds.

In the 2005 era, there was a common theme: appraisers would round-up the value whatever the mortgage officer told them to do. Unethical appraiser were part of the bubble problem. In 2008 and beyond another common theme is happening: appraisers are not hitting the real market value. It doesn't matter in 20 people are willing to pay more for the home, you can get a worthless appraiser who says it is worth $20K less. I realize it isn't an exact science and it is subjective. But since appraised values are not keeping up with REAL values, I felt the need to help nudge the REAL value up. For the record it work. Like anytime you are trying to sell something, you need to correctly sell your point of view. I had my "sell" down pat. Rest assured you should not be offended. If I bluntly asked you to get a value while you worked for the bank, that would be offensive, I'm not stupid.

There were other benefits, I already showed the buyers the value over a month before the scheduled closing. I explained that I feel the my hired appraisal is low and if the BANK appraisal comes in lower, this is the established value and I am not compromising. That saved last minute negotiating which is what happened.

If you are offended that I wanted to hire you and I explained I was concerned about getting a lazy appraiser who undervalued my home, that would be your own hang-up. If I explained list several probable comps as not ideal (and the reason why they sold low) and you are offended, again that's your own hang-up.

Originally Posted by SMG

Also, looking to see where I live in hopes it will affect the values I place on upgrades and amenities...really?

Absolutely! Like any industry, some appraisers live in run-down homes. I had a 4000 sq foot home that was meticulously maintained. I don't want someone who doesn't have a desire to want nicer stuff appraising my home. I am working off of odds not absolutes.

[jimj]

Just as a for what it's worth, we're looking to refi and were still stinging from our appraisal 4 months ago which we,our loan officer,realtor felt was way low. Needless to say we didn't go through with the refi as it wouldn't have been worthwhile so we decided to wait until more houses sold in our area as regular sales not distressed.
Thankfully one went on the market for $179k and went under contract for asking price 2 months later by an FHA buyer (don't know if this matters to appraisal).
Nice well taken care of 2 story 2000 sqft with a newer pool and interior upgrades. Well, here comes the appraiser who says it's only worth $167k commenting that single stories are getting more than 2 stories right now.
The interesting thing is this house appraised for only $10k higher than a REO with no pool or upgrades plus since it was a REO no disclosures of any kind that had sold 6 months ago.

From what the owner is saying everyone is baffled by this appraisal. He said they could understand $173 +/- but not the stated amount.
I'm betting that since we still have walk aways hitting here in dribs and drabs they're weighing heavy on the resales but the strange thing is the new houses being built around us that are usually smaller with less upgrades are selling for more per sqft.
Am I missing something? Why aren't the new builds subject to the same criteria?

[SMG]

Mn Born n raised-So, using your logic, people in lower income areas do not place a value on upgrades and those in more upscale communities value them more? I had never thought about that, probably never will again. If one must generalize so much, I would be inclined to think the opposite may be true. I read that statement about three times before commenting on it, thought it was odd. I seriously doubt that my community or my amenities affect values i put on others properties. Also, if I do not allow a property owner, agent or lender to lead me, it is not a hang up as you say. I am doing my gig honestly, no hang up involved. I do listen to property owners, agents and lenders. Will I allow them to influence values I provide? Not one iota, nor should I. Those are not hang ups.
I am not going to comment any further on your post, just to say that any values I provide are based on the criteria I already mentioned earlier, not on where you need your value to be. Hopefully when it all shakes out, it works out for the seller and buyer. I do not know of any of my peers that approach it any different, I am sure they are out there.

[MN-Born-n-Raised]

Originally Posted by SMG

Mn Born n raised-So, using your logic, people in lower income areas do not place a value on upgrades and those in more upscale communities value them more?

A millionaire in Sun City lives with old styles because he doesn't see the value. The millionaire in Scottsdale appreciates nicer things. So we must agree to disagree. I realize there are exceptions to the rules. I aim towards following the averages.

Originally Posted by SMG

I do listen to property owners, agents and lenders. Will I allow them to influence values I provide? Not one iota, nor should I. Those are not hang ups.

If you are presented with logic, I'd hope to you listen to agents and home owners. Since the beginning of time, people change their opinion by persuasion. You are not immune to persuasion especially if it is done logically and professionally. Putting it another way, the banks appraiser didn't know my real intentions.

So why is it that if the OP hires 10 appraisers in NW Phoenix, he might get 10 values ranging in values over $10K? That's real money! When you answer that question you will know why I used my approach. As I said, it WORKED!

[SMG]

You generalize a ton, huh?. I still think the piece of looking up where the appraiser lives and determining his mindset is odd...kind of creepy. Has so many holes in it...we do agree to disagree. Lets move on.
I am not going to answer a hypothetical about ten appraisers giving ten different answers as it is just a make believe question. Truth of the matter is, the OP will not get ten appraisals done and most likely would not get ten different answers. Now, why will different valuations give different values? A few reasons. One may be a BPO, one may be an appraisal. Some banks have BPO people do a "drive by" and the agent does not even see the exterior. Values have been rising very quickly here the last couple of years. Using older sales vs newer sales will affect values. Some lenders may want to see the value of a property of 90 to 120 days. An appraiser than uses comps that sold in one week will not be representing that....and on and on. Will this OP be getting ten values from ten appraisers? No. But many factors can drive inconsistent values.

[MN-Born-n-Raised]

Originally Posted by SMG

You generalize a ton, huh?. I still think the piece of looking up where the appraiser lives and determining his mindset is odd...kind of creepy. Has so many holes in it...we do agree to disagree. Lets move on.

Every person alive generalizes a lot. The only question is how much. Google is a great tool. I use it often. I can learn a ton about who I hire etc. If I hire a contractor, I look at his truck. If it is clean inside and out, he probably is detailed. The key word is PROBABLY. Yes, I am generalizing.

I read people for a living. But in any generalizations, there are holes in it. That goes without saying. But it doesn't change the fact that I will be right more often than not by generalizing with specific situations.

Originally Posted by SMG

I am not going to answer a hypothetical about ten appraisers giving ten different answers as it is just a make believe question.

I'm well aware of why there are value variations. The biggie is subjective in nature as well as methodology. If I present an appraiser with another certified appraisers value, it's going to influence more than a few people so long as it is realistic. The goal is to shake out the low outliers.

[SMG]

Originally Posted by MN-Born-n-Raised

So why is it that if the OP hires 10 appraisers in NW Phoenix, he might get 10 values ranging in values over $10K? That's real money! When you answer that question you will know why I used my approach. As I said, it WORKED!

This question you asked was the reason I answered why one may see differing values. I did not know you had the answer or I would not have bothered.