5 Value Related Items To Consider When Buying A Home

Are you in the market to buy a home?  Now is a great time because home prices are lower than they have been in a long time, and interest rates are good too.  I wanted to share some insight from an appraiser (me) that might help you make a better buying decision.  By paying attention to these items you can maximize the return on your investment when you sell because certain features of the house can help increase its value.  I have included 5 value related items that I consider when appraising a house.

  • Gross Living Area (GLA)– This is simply the heated and cooled living area of the home.  Having the largest home in the neighborhood is not good because of the theory of regression, which states that the superior property is adversely affected by its association with an inferior property of the same type.  The smaller homes will pull the larger homes value down.  On the opposite end, having the smallest home will benefit you because the larger, higher priced homes will pull your homes value up.  This is called progression.
  • Bad Floor Plan- The layout of a home can affect its value because the floor plan may be unattractive to potential buyers.  An example of this includes the need to pass through a common living area to get to a bedroom.  This would decrease privacy and typically affects marketability.  A home with a good flow is more appealing.
  • Proximity to Outside Negative Influences– Outside influences include things outside of the boundaries of the home that you are typically not able to change.  Examples of this include being located next to an interstate or airport and being subjected to the loud noise levels.  A home located on a street that has lots of traffic would also fall into this category.  Problems of this nature are the most negative or harmful because the location of the home cannot usually be changed.
  • Unique Features Of The Home- Unique features of a home are o.k. if they are accepted by other buyers that may be interested in purchasing the home.  Some unique features of a home may only be desired by a limited number of people.  The classic example is a swimming pool.  Not all people buying a  home want a  pool.  Because of this, the number of buyers is limited to those looking for a pool, and as a result, swimming pools usually do not return 100% of the cost.  This is not the case all of the time, but can be location specific.
  • Condition and Appeal- The condition and appeal of the home is usually the easiest thing to change.  What I am describing here are the “cosmetic” features of the home.  A bad paint color or unattractive carpet can be replaced at a reasonable cost which can change the homes condition and appeal.  The added value of the improvement is typically more than the cost to do them.

There are other value related items that appraisers look at when appraising a home, however these five are some of the most important.  What other items do you think are important to a properties value?  Have you had any first hand experience in trying to sell a home with some of the above mentioned items or others?  I would be interested in hearing your story.

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on facebook.

 

 

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