As we near the end of the series in understanding and navigating appraisals, today we’ll take a look at two of the biggest drivers of a strong appraisal: location and size of the home. Not only are these key, but, there’s also nothing that you can do about them as a Wake County home buyer attempting to take ownership of a property.
Triangle area home sellers will have the ability to increase square footage on the property by simply adding on to the home, but, I don’t see this occurring if the home is already listed for sell. In essence, it means the size is the size. And the location is certainly the location. Barring the home being mobile, it’s not going anywhere. So, you are where you are.
A Look Through the Wake County Appraising Keyhole
Understanding that (for the most part) these are two variables that you have no control over at this stage of the process, we can begin to delve into how each of the two specifically feed appraisal figures.
Generally, the appraiser begins with location. They will look for homes that have sold in the same neighborhood or the surrounding area. Typically within a one mile radius, however, if there are no sales present they’re allowed to go further out. The further the appraiser goes to find comps, the more explaining they’ll have to do to the bank.
Depending on the type of mortgage the Wake County home buyer is applying for there are rules that the appraiser must use a certain number of homes within a neighborhood and outside a neighborhood. Some homes have plenty of comps within the neighborhood to tell the value story. Other times they must look outside the neighborhood and comps are hard to find.
When they go outside of the neighborhood of the subject property they will look for other neighborhoods with similar characteristics and amenities. They will also research the comparison neighborhood back to the original build to see if these two neighborhoods sold for a similar price when they were new construction. This is a test to make sure the development cost were similar and that they have truly found comparable locations.
2. Size of The Home (Buckle Your Seat Belts!)
Appraisers measure the house and look for other Triangle area homes similar in size, design and quality. Square foot measurements are taken from the outside of a home. Inside measurements are also taken to back out two story space such as foyers or great rooms. Stairs are counted only once. Knee walls are backed out if they are not 5 feet high. Square footage all on one level has the highest price per square foot value because that type of construction cost more to build originally.
All square footage is not equal. This is the biggest mistake non-appraisers make in determining value. Homeowners will find out what their neighbors house sold for, divide that sales price by the sold properties square footage and then take that number and apply it to their home. If your neighbor’s house was once two levels and you have a finished attic or basement that formula doesn’t work at all.
If your neighbor had a first floor master and you do not that formula also doesn’t work. It costs more to build a home with a first floor master because the foot print of the foundation is larger. The builder had to build out and not up to get that coveted first floor master suite.
But Wait…There’s More…
Calculated square footage without consideration of design is also one of the many mistakes Zillow Zestimates can’t possible correct. Zestimates are fun, but, completely unreliable because there are zero adjusments for differences. Zillow is a computer that depends upon inferior data. What does momma say: “garbage in garbage out”? The same holds true here.
Another huge error made in valuing a home is using one math calculation for all levels of a home. New Realtors and every home owner I have ever met make this mistake time and time again. I repeat all square footage is not equal. A split level home can’t be compared to a two story home. A third floor finished attic or a finished basement value is not equal to the first and second floor of a two story home. Appraisers look for like construction and design.
Don’t Navigate the Wake Count Home Appraisal Process Alone!
The appraisal process can be very detail intensive and there is no “one size fits all” calculation to figuring out what a home is worth. Because of this, appraisers are held to the highest standard. However, they are still human and opinions of value aren’t always in your favor.
Having battle-tested agents on your side like Linda Craft & Team will go a long way in making sure that your Wake County home buying process is smooth and seamless. We fight so that you don’t have to. Search thousands of beautiful homes in the Greater Raleigh area and when you’re ready to let us put you in your dream home, just let us know.
Have a great day!