Comments on: What factors determine a home’s value when it is appraised?

By: LTD

LTD — Thu, 11 Mar 2010 12:37:59 +0000

YES…the condition of the home plays a HUGE role…
"Comps" (comparables) are done on SOLD properties in the area within the last 12 months..(6 months for some lenders)…
and will GREATLY affect what your home will appraise for….you cannot go on "listed" prices..because you can list a property for anything you want…it’s what it SELLS for that is the "market value" of a home and/or property.
Since newer homes in your area could NOT be used as "comps" (they are in NO way comparable to your property..comparables have to be of like size, age, sq.footage, lot size, and within a certain number of miles from the "subject" property (this would be what your property is called for appraisal purposes)…so since the other homes are newer, and on less acreage, they CANNOT be used as comps for appraisal value…
If some homes (that are comparable to yours) sold recently for less than what they would have when your appraisal was done 5 years ago (and especially if there have been a number of foreclosures in your area…they will bring appraised values DOWN)…then, yes, the home can and would appraise for less….
The home is also 5 years older than it was…and being sold "as is" also means to the appraiser that the cost of repairs is too much for the owner….meaning, it’s got some problems….
References :
I am a licensed real estate broker in NC and worked in my father’s appraisal business for serveral years…

By: Matthew L

Matthew L — Thu, 11 Mar 2010 12:05:59 +0000

There are a lot of factors that go into an appraisal, but the biggest is the value of comparable homes in the area. When real estate agents list a home for sale and when appraisers put a value on a property, they look at comparable sales in the area. If other homes in the area have been selling for less, that will hurt the appraised value of a home. An excessive number of homes on the market in your area can hurt the value as well.

Other things like age of home, square footage of home, upgrades to the property, etc. also play a large role in a home’s valuation, but ultimately it comes down to the individual appraiser’s expert judgment. You could have 10 different appraisers come through a home and all 10 of them would come up with different values, and it is not uncommon for different appraisals to differ by tens of thousands of dollars.
References :

By: flamingojohn

flamingojohn — Thu, 11 Mar 2010 11:18:59 +0000

The house is basically worth what similar houses around it are being sold for. Age is a factor, condition is a factor, land area is a factor. The 5 acres may actually hurt the value as I assume there are few properties that have similar land size. The deferred maintenance will also affect the value of the home. In general houses have been losing value the last several months on top of the other things I mentioned- the depressed sales market is what is contributing to that.
References :
10+ yrs in mortgages

By: mazziatplay

mazziatplay — Thu, 11 Mar 2010 11:02:59 +0000

Appraisers value a house based upon location, type, condition, amenity, condition, and comparable sales within the last 6 months.

Comparables cannot be older than 6 months since the sales date, must have indeed sold, not just be listed for sale, and be truly comparable to the subject property as possible. A split level and a ranch stype are not comparable. Just because the house down the street sold it may not be the best comparable. Appraisers make dollar adjustments to value for differences between the subject property and the comparables.

Market conditions can have a major effect as in a slow market there may be fewer comparables for the appraiser to use to support value and sellers may be accepting less in order to facilitate a sale thereby reflecting in lower values on the comparable sales avaible for the appraiser’s use.

It is not unusual for properties to decrease in value as market conditions deteriorate.
References :
20+ years as a direct mortgage lender