What factors affect home value most?
BY LISA SCONTRAS
Last month we heard from a professional home inspector, who shared tips on how proper maintenance of the major components of your home electrical, plumbing and roof preserves its value.
But in order to really understand what affects home values as determined by the banks, you need the expert opinion of a licensed appraiser.
Bert Matsuwaki of Kai Appraisal Services says when he walks up to a house, his checklist starts with basic curb appeal.
“I look at a home’s exterior, in particular the roof, the landscaping. Is there solar, are there gutters and, in general, is the home well-maintained?” says Matsuwaki. “The exterior appearance doesn’t have to be fancy, but it should look well-kept, especially in comparison to other comparable homes on the market.”
The appraiser’s basic process of evaluating a home’s value includes a comparison of the subject house to other “comparable” homes that recently sold in the neighborhood ideally, homes with similar upgrades and of the approximate age and size. By comparing these similar homes, the appraiser then adjusts the subject home’s value up or down.
While each appraiser’s evaluation process may vary to some extent, most all appraisers use this basic method and include the following eight categories:
Whether or not a property has a view of Diamond Head or the ocean has such a bearing on value that it is generally desirable that comparable properties have the same view.
2. Quality of Construction. Brand-new construction will be at the higher end of the spectrum, and single-wall construction may be at the lower end, according to Matsuwaki.
3. Age and Condition of the Home. Generally, the newer the home is, the higher the value of the home, assuming everything else is equal when compared to other properties.
4. Square Footage and Room Count. Of course, the number of bedrooms and baths, and overall square footage affect value. If the subject property is larger, there are adjustments given for that. Lot size is considered as well.
5. Air Conditioning and Solar. Hawaii’s sunny climate makes air conditioning and solar valuable. Split-unit air conditioners run more efficiently and are considered more valuable than window a/c units. Adjustments for central air are even more. And since solar saves energy dollars, it is a strong selling point.
“Solar is a big topic right now,” says Matsuwaki. “A good solar system really enhances the value of a home.”
6. Carport vs. Garage. Matsuwaki might give an extra $5,000 value for having a garage, as compared to a carport. Dollar amounts may vary, depending on the quality and location of the home, and the opinion of the appraiser.
7. Upgrades and Remodeling. When evaluating improvements, Matsuwaki takes on the role of the consumer.
“I’m looking at how good are the renovations and the quality of the upgrades?
What materials did they use? Monier tile or composition roof? Granite or Formica? Does it have high-end appliances? Garage vs. carport? Quality building materials speak volumes.”
Matsuwaki encourages folks to make a list of big-ticket improvements recently completed, along with copies of receipts, to give to the appraiser. If you’ve put on a new roof, re-wired your electrical system or renovated your kitchen, it is helpful for the appraiser to know what the improvements cost and when the work was done.
“If a person has really upgraded his condo and provides me with receipts saying this is how much I spent, even though it isn’t dollar-for-dollar, I’ll take that into consideration,” he says. “I love it when the homeowner provides me with a list of improvements, as it helps me to justify my value and may mean a higher adjustment.”
8. Landscaping/Walls/Pools. Swimming pools are a good example of how the appraised value has little to do with the cost of installation. According to Matsuwaki, a pool might cost between $25,000 and $50,000 to install, but the appraised value may be quite a bit less.
“It is not necessarily a dollar-for-dollar return on investment,” he says. “In general, depending on the neighborhood, a pool’s value will vary.”
Thinking about renovating? Consult with your Realtor to find out what improvements in your neighborhood are considered necessary.
Editor’s Note: Values may vary from appraiser to appraiser.