The Appraiser’s Guide to Evaluating Home Value Before You Buy

Strategies for Evaluating Home Value: What Buyers Need to Know

Appraiser's Guide to Evaluating Home Value Before You Buy

When it comes to purchasing a home, understanding the various factors that affect its value is important. Whether you’re a first-time homebuyer or have years of experience in buying and selling houses, knowing what to look for can significantly influence your decision-making process and potential returns on your investment. Evaluating home value is essential in this regard. This week I want to share with you the major value-related items every buyer should consider before making their purchase, ensuring you’re well-equipped with knowledge that’s both practical and insightful.

Key Factors For Buyers to Consider

1. Location and Neighborhood Dynamics

The old saying “location, location, location” is still important in real estate. A home’s value is heavily influenced by its geographic location and the characteristics of its neighborhood. Consider the proximity to essential amenities like schools, parks, shopping centers, and public transportation.

I have found that the school system is the biggest driver of property values in the Birmingham, Alabama market. These features can significantly enhance the desirability and therefore the value of a property.

Additionally, it’s wise to look into future development plans in the area as they could either boost or detract from your home’s value in the long run. Keep an eye on the neighborhood’s growth trends and planned developments.

2. Property Size and Usable Space

The square footage of a property and how that space is used can greatly affect its appraisal value. More than just the total area, functional layout and efficient use of space play substantial roles in valuation.

Homes with open floor plans and adaptable living spaces tend to sell at the upper end of the price range of similar homes. It’s also important to differentiate between above-ground and below-ground living spaces, as basements often do not carry the same value as main-level square footage.

While basements definitely add value the type of basement and the rooms in the basement will have a big impact on buyers and how much more they are willing to pay for it. It’s also important to keep in mind that a room must have a window or egress to the outside to officially be called a bedroom.

3. Condition and Age of the Property

The age and condition of a home directly impact its market value. Older homes might have more character but they may require significant updates or repairs to address structural or maintenance issues, which can affect the appraisal.

Renovations and updates can reduce these effects by increasing a home’s market appeal and extending its lifespan. Appraisers factor in the effective age of the house which can be reduced with updates to the home.

Always consider the ‘cost to cure’ major defects when evaluating a property’s worth. You may be getting a good price on the house but is it worth it considering how much money you need to spend to bring in up to par with other homes in the neighborhood?

4. Architectural Style and Aesthetic Appeal

Architectural trends and the external appeal of a home also influence its market value. Properties that are more similar to current popular home styles or have a timeless appeal are likely to attract more buyers and sell for a higher price.

The first impression a home makes, often referred to as curb appeal, is important and can be enhanced with simple upgrades like landscaping or exterior paint. A home lacking curb appeal would be a better investment than one requiring structural changes since the cost to bring a property more in line with what is typical structure-wise would be more significant and the cost may not be recouped in a resale.

5. Upgrades and Improvements

When touring potential homes, take note of any upgrades and improvements. Certain renovations, such as updated kitchens and bathrooms, can significantly increase a property’s market value.

It’s important to weigh the cost of these renovations against their potential return on investment. Along with the always popular kitchens and bathrooms, energy-efficient upgrades are becoming more in demand and can also offer long-term cost savings, further enhancing property value.

6. The Local Real Estate Market

Understanding the dynamics of the local real estate market is essential. Whether it’s a buyer’s or seller’s market can greatly influence home prices and property values.

Additionally, the supply and demand, as well as comparable property sales, can help us understand what the market value of a specific home might look like for a particular area. Making a buying decision based on market data rather than emotion can help ensure that your purchase is a sound investment.

7. External Factors

External factors such as zoning laws, property taxes, and homeowners association (HOA) rules can also potentially have an impact on the appraisal value. Proximity to less desirable elements like busy roads or industrial areas might reduce a property’s appeal.

The common term for this situation is External Obsolescence. This type of depreciation is not easily fixed like others. With physical depreciation you can update a house and reduce its effective age, making it appear to be newer than its actual age.

Because the external obsolescence comes from outside of the property it may be beyond the control of the owner to fix. It’s important to consider these factors when evaluating a home’s potential.

8. Long-Term Value Considerations

Thinking long-term is crucial when purchasing a property. Consider potential changes in the neighborhood and how they might affect future property values.

The potential for resale and whether the area is likely to remain in demand should influence your decision. Understanding these factors can help you make a more informed choice that aligns with your long-term real estate goals.


Buying a home is a significant investment, and understanding the factors that impact property value is essential. By considering these value-related items and evaluating home value, you can make more informed decisions that align with both your immediate needs and long-term financial goals.

Always consider engaging with a professional appraiser or real estate expert to gain a detailed understanding of a property’s value before committing to a purchase. If I can answer any questions you may have feel free to contact me and as always thanks for reading.

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  1. So many factors to juggle here. Thanks Tom.


  1. […] as the long term.  In this article by Tom Horn, who is a professional appraiser, he provides a guide that home buyers can use to value a home through the lens of a home appraiser.  From looking at things like location, upgrades and improvements, the size and space, and more […]

  2. […] The Appraiser’s Guide to Evaluating Home Value Before You Buy – Birmingham Appraisal Blog […]

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