by Conrad Meertins | Dec 9, 2024 | Uncategorized
Whether you’re selling your home or refinancing your mortgage, an appraisal is a critical step in the process. Appraisers evaluate your property to determine its market value. However, certain issues, or “appraisal red flags,” can lower your home’s value. Let’s explore these red flags and how you can avoid them.
Introduction
Picture this: You’re ready to make a big move. You’ve got a buyer lined up for your home or you’re all set to refinance your mortgage. But there’s one crucial step left – the home appraisal. Enter the appraiser, the person who gets to decide the market value of your home. This individual walks through your property, eyes sharp, jotting down notes, assessing every nook and cranny.
Now, let’s talk about something called “appraisal red flags.” Think of these as the little gremlins that could potentially lower your home’s value in the eyes of the appraiser. It could be something as significant as a crack in the foundation or as subtle as outdated electrical systems.
This article will guide you through these red flags, helping you understand what they are and why it’s so important to be aware of them. Because, let’s face it, no one wants a lower appraisal than expected, right? So, let’s dive in and demystify these appraisal red flags.
Understanding Appraisal Red Flags
You’ve done everything you can think of to get your home ready to sell. Fresh paint on the walls, new fixtures in the bathroom, even a few strategic landscaping improvements to enhance curb appeal.
But when the appraiser arrives, they point out several issues that you hadn’t even considered. Suddenly, your home’s market value takes a hit. This is the power of “appraisal red flags.”
So, what exactly are these red flags? In the simplest terms, appraisal red flags are issues or conditions that can negatively impact the value of your home in the eyes of an appraiser. These can range from obvious physical problems, like a cracked foundation or outdated systems, to more subtle issues, like unpermitted renovations or even factors outside your home, like the gas station next door..
Now, you might be wondering: why should I care about these red flags? Well, in the world of real estate, knowledge is power. Being aware of potential appraisal red flags can help you anticipate issues before they become a problem, allowing you to address them proactively. Whether you’re a homeowner preparing for an appraisal or a buyer trying to understand the value of a potential investment, understanding these red flags can be a game-changer.
Think of it this way: each red flag is a conversation between you and the appraiser. They’re saying, “Hey, this could be a problem,” and you have the opportunity to respond, either by fixing the issue or by adjusting your expectations about your home’s value. So, let’s dive into these conversations and learn how to navigate them effectively.
Top 5 Appraisal Red Flags
Let’s dive into the nitty-gritty, shall we? Here are the top five red flags appraisers are on the lookout for when they swing by your property.
First up, Structural Issues. Think of your home as a human body, the structure is the skeleton that holds everything together. If there are cracks in the foundation or the roof looks like it’s seen better days, it’s like a broken bone or a bad back. It’s a serious problem. These types of issues can significantly knock down your home’s value because they’re costly to repair and can lead to other problems down the line. The key here is that if its observable to the appraiser that it’s something that he will likely notate in his or her report.
Next, we have Outdated Systems. If your home’s electrical, plumbing, or HVAC systems are older than the cast of Friends, you’ve got a problem. Appraisers know that outdated systems can be a ticking time bomb of expensive repairs. Plus, they’re not as efficient or safe as their modern counterparts. The appraiser is not a home inspector, but its easy to see corrosion on pipes, exposed electrical wires or leaking water heaters.
Thirdly, Poor Maintenance. You know that peeling paint you’ve been meaning to address or that leaky roof you’ve been ignoring? Yeah, appraisers notice that too. Signs of neglect like these are red flags because they suggest there might be other, potentially more serious issues lurking beneath the surface.
The fourth red flag is Unpermitted Additions. That DIY sunroom might seem like a selling point to you, but if it was done without the proper permits, it could be a liability. Unpermitted additions can lead to serious legal and safety issues, and appraisers may mention them in his report.
Finally, Neighborhood Factors. You might have the nicest house on the block, but if your block happens to be right next to a noisy highway, it’s going to hurt your appraisal. Appraisers take into account the market’s reaction to such influences when determining a home’s value.
In essence, appraisers are like home detectives, looking for clues that tell the true story of a property’s value. These five red flags are key indicators they use in their investigation. So, if you’re preparing for an appraisal, it’s wise to address these issues head-on. Don’t try to hide them or hope they’ll go unnoticed. Trust me, they won’t.
Tips to Avoid Appraisal Red Flags
So, you’ve got a good handle on what appraisers are on the lookout for – those pesky red flags that could potentially lower your home’s value. But what can you do about it? How can you make sure your home passes the appraisal with flying colors? Don’t worry, I’ve got your back. Let’s roll up our sleeves and dive into some practical tips that can help you sidestep these common appraisal pitfalls.
Firstly, take a good, hard look at your home. And I mean really look. Put yourself in the shoes of an appraiser. Are there any glaring issues that jump out at you? Cracked walls? Peeling paint? Outdated electrical systems? These are all things you’ll want to address before the appraiser’s visit.
Next, get your hands on a home inspection checklist. This can be a real lifesaver. It’ll guide you through each part of your home, helping you identify and fix potential red flags. And trust me, it’s a lot easier to fix these issues before the appraiser points them out.
Now, let’s talk about those unpermitted additions. You know, that fancy new deck you built last summer? If you didn’t get the proper permits for it, it could be a real thorn in your side during the appraisal. So, make sure you’ve got all your paperwork in order. If you’re missing any permits, now’s the time to get them.
Finally, remember that factors outside your home can also impact your appraisal. You might not be able to control the noise from the nearby highway, but you can make your home more appealing in other ways. A well-maintained garden, a new coat of paint, or even some attractive outdoor lighting can all help to boost your home’s curb appeal.
As Tom Horn, a seasoned appraiser from the Birmingham Appraisal Blog, wisely points out, “The best defense is a good offense.” By taking a proactive approach and addressing potential red flags before the appraisal, you’ll be in a much stronger position. So, don’t wait for the appraiser to knock on your door. Get ahead of the game and make sure your home is in tip-top shape.
Conclusion
So, there you have it, folks. We’ve taken a journey down the less-traveled road of home appraisal, shedding light on the elusive ‘red flags’ that can potentially play spoilsport in your home’s valuation game. Structural issues, outdated systems, poor maintenance, unpermitted additions, and neighborhood factors – they all play a pivotal role in determining the value of your home in the eyes of an appraiser.
Now, you might be thinking, “This all sounds pretty daunting, doesn’t it?” But here’s the kicker – it doesn’t have to be. As a homeowner, you hold the power to ensure a successful appraisal. It’s all about staying proactive, keeping your home in good shape, and addressing potential issues before they escalate into full-blown red flags. Remember, a well-maintained home is not just a pleasure to live in; it’s also a goldmine when it comes to appraisal.
So, go ahead. Take a good look around your home. Is there a crack in the foundation you’ve been ignoring? An outdated electrical system that’s due for an upgrade? Or maybe an unpermitted addition that needs to be legitimized? Tackle these issues head-on, and you’ll be well on your way to acing that appraisal.
In the end, it’s not just about getting a good appraisal. It’s about maintaining your home to the best of your ability, and ensuring it reflects the true value it holds. Because, let’s face it, your home is more than just a property – it’s a reflection of you. And you, my friend, are priceless.
by Conrad Meertins | Dec 2, 2024 | Uncategorized
Getting your property appraised can be a daunting task, especially if you’re unsure about how to prepare for it. But fear not! This guide is here to help you get your home ready for the most accurate valuation possible.
Introduction
So, you’re about to dive into the world of home appraisals. It might feel like uncharted territory, like setting foot on the moon without an astronaut’s guide. But here’s the thing: you’re not alone in this journey. I’m here to navigate you through the twists and turns, the ups and downs, and the ins and outs of home appraisals. But first, let’s get our bearings.
A home appraisal, in its simplest form, is a professional evaluation of your property’s worth. It’s like a health check-up, but for your house. And just like your health, it’s crucial to get an accurate diagnosis. An incorrect appraisal could mean selling your home for less than it’s worth or, conversely, pricing it so high that it languishes on the market.
Now, I know what you’re thinking: “Great, another thing to stress about!” But hold your horses, because this guide is here to ease your worries and help you prepare for an accurate home appraisal. Think of it as your personal playbook, filled with insider tips, practical steps, and sage advice. So, strap in, and let’s get started on this journey to a successful home appraisal.
Understanding the Home Appraisal Process
Imagine you’re a detective. Your mission? To discover the true value of a property. That’s what the home appraisal process is all about. It’s an investigation of sorts, an exploration into the value of your property. Sounds thrilling, right? Let’s dive in.
First off, it’s important to understand that a home appraisal isn’t a one-size-fits-all process. It’s a personalized investigation, tailored to your property. It’s about assessing the unique features and characteristics of your home, from the age and condition of the property to its location and size.
Think about it. Would a vintage, Victorian-style home in a historic district be valued the same as a modern, minimalist apartment in the city center? Probably not. And that’s where the appraisal process comes in. It’s about understanding what makes your property unique and how these factors contribute to its value.
So, how does it work? Well, it starts with a professional appraiser visiting your property. They’ll inspect the home, taking note of its condition, size, design, and any unique features. They’ll also consider the property’s location and how it compares to similar properties in the neighborhood.
But it doesn’t stop there. The appraiser will also take into account market trends and recent sales data of comparable homes in your area. It’s a thorough process, combining both the physical attributes of your home and the larger real estate market context.
So, what’s the takeaway here? A home appraisal is a holistic process, one that considers a wide range of factors to determine the true value of your property. It’s not just about what your home looks like, but also where it’s located, how it compares to similar properties, and how it fits into the broader real estate market.
In the end, understanding the home appraisal process is like having a roadmap. It helps you navigate the journey, giving you a clearer idea of what to expect and how to prepare. So, ready to embark on this appraisal adventure? Let’s move on to some top tips to help you prepare.
Top Home Appraisal Tips
Picture this: you’re about to invite a professional appraiser into your home, and you’re hoping for the highest valuation possible. What can you do to tip the scales in your favor? Here are some insider tips to help you prepare for a home appraisal that reflects the true value of your property.
- Understand the Market: The value of your home is largely determined by the current real estate market conditions in your area. So, do your homework. Look at the recent sales prices of similar homes in your neighborhood. Having a sense of the market can help you set realistic expectations for your own home’s value.
- Highlight the Positives: Every home has its unique features. Maybe it’s a recently renovated kitchen, a large backyard, or a convenient location. Make sure these highlights are not overlooked. Point them out to the appraiser and explain why they add value to your home.
- Don’t Forget About the Small Improvements: While major renovations certainly increase a home’s value, don’t underestimate the power of small improvements. A fresh coat of paint, new hardware on cabinets, or updated lighting fixtures can make a big difference in the overall appeal of your home.
- Keep Up with Regular Maintenance: A well-maintained home is a valuable home. Regular maintenance tasks like cleaning gutters, servicing HVAC systems, and repairing leaky faucets show that you take good care of your property. This can positively influence an appraiser’s assessment of your home’s condition.
- Be Present During the Appraisal: It’s important to be home during the appraisal. You can answer any questions the appraiser might have and provide additional information about your home’s features and improvements. Plus, it gives you a chance to showcase your home in the best light.
Remember, an appraisal isn’t just about tallying up square footage and counting bathrooms. It’s about assessing the overall quality, condition, and appeal of a home. By understanding the process and taking these steps, you can help ensure your home is appraised at its true worth.
Practical Steps to Prepare for Home Appraisal
Before we dive into the meat of this section, let’s take a moment to imagine a scenario. Picture this: You’re about to host a dinner party for some very important guests. You’d naturally want your home to look its best, right? You’d clean, declutter, and maybe even do some minor repairs. Preparing for a home appraisal isn’t much different.
First things first, clean and declutter. Just like your dinner guests, appraisers are people too. And let’s be honest, no one likes to navigate through a maze of mess. A clean, organized home can make a positive impression.
Next, repair and maintain. Remember that leaky faucet you’ve been meaning to fix? Now’s the time. Appraisers look for signs of neglect or damage that could affect the home’s value. Addressing these issues beforehand can save you from potential valuation dings. It’s not just about major repairs either. As mentioned earlier, regular maintenance like servicing your HVAC system or cleaning your gutters can also make a difference.
Finally, document improvements. Have you renovated the kitchen or installed a new roof? Keep a record of these improvements. Appraisers aren’t just looking at your home’s current condition, they’re also interested in its history. Providing documentation of renovations and upgrades can help justify a higher valuation.
These practical steps aren’t just about impressing the appraiser. They’re about presenting your home in the best light possible. It’s about showing respect for your property and its value. So, don’t think of it as a chore. Consider it an opportunity to showcase your home’s true potential.
Common Mistakes to Avoid During Home Appraisal
When it comes to the home appraisal process, even the most well-intentioned homeowners can unwittingly sabotage their own efforts. Here are some common missteps you’ll want to sidestep for a smooth and successful appraisal:
- Ignoring Minor Repairs: I know I might sound like a broken record here, but small issues like leaky faucets, cracked windows, or chipped paint may seem inconsequential, if multiplied by 10, can suggest to an appraiser that the home hasn’t been well-maintained. Make these repairs before the appraiser visits to ensure your home is seen in the best light.
- Overestimating the Value of Renovations: Not all home improvements are created equal. While you may value your custom-made wine cellar, an appraiser might not see it as a significant value-add. Be realistic about the financial return of your renovations.
- Failing to Document Improvements: If you’ve made significant upgrades to your home, like a new roof or HVAC system, make sure you have the documentation to prove it. Without this, the appraiser might overlook these improvements.
- Being Absent During the Appraisal: While you don’t need to hover, being present allows you to answer any questions the appraiser might have. Plus, it gives you a chance to highlight the features you love about your home.
Avoiding these common mistakes can go a long way towards ensuring your home is appraised accurately. Remember, preparation is key. By understanding the appraisal process and taking the time to properly prepare, you’ll be setting your home – and yourself – up for success.
Utilizing Resources for a Successful Home Appraisal
So, you’ve done the hard yards. You’ve decluttered, fixed the wonky step, and even spruced up the garden. But, are you really ready for that home appraisal? There’s one more step that can help you ensure you’re not leaving any stone unturned – utilizing resources.
Imagine you’re about to bake a cake for the first time. You have all the ingredients, but do you just toss them into a bowl and hope for the best? Probably not. You’d likely follow a recipe, right? Think of resources like your recipe for a successful home appraisal.
One such resource is a home appraisal preparation checklist. Comprehensive checklists can guide you through the preparation process. They help you track your progress, ensure you’re covering all bases, and give you a sense of confidence that you’re on the right path. If you’d like to grab mine, visit the link below. I know what appraisers look for and what homeowners often overlook. By using these resources, you’re essentially getting insider tips on how to make your home shine in the eyes of an appraiser.
And it’s not just about getting a higher valuation. An accurate appraisal can save you from overpricing or underpricing your property, both of which can lead to financial losses or missed opportunities.
So, don’t just wing it. Use the resources available to you. They’re like your secret weapon for a successful, accurate home appraisal. After all, when it comes to something as important as your home’s value, wouldn’t you want to be as prepared as possible?
Conclusion
As I wrap up our guide, let’s revisit the key steps to ensure your property is well-prepared for an accurate home appraisal. It’s more than just a casual stroll through your property. It’s about presenting your home in its best light, making sure it’s clean, decluttered, and well-maintained. It’s about keeping a detailed record of all improvements and renovations.
Remember, it’s not about tricking the appraiser with superficial enhancements, but genuinely showcasing the value your property holds. Like a proud parent at a school open day, you want to highlight your home’s best features, but not hide its quirks. Every home has them, and they’re part of what makes your property unique.
Taking the time to prepare your property properly is not just about getting a higher appraisal value. It’s about understanding the true value of your home and being able to present it confidently. It’s about being an informed homeowner who knows their property inside out.
The benefits of an accurate property valuation extend beyond the appraisal day. It helps in setting a fair selling price, securing a mortgage, or even for insurance purposes. It’s a critical step in your homeownership journey, and we hope this guide has made the process a little less daunting.
Don’t forget to utilize resources like the home appraisal preparation checklist from our website. These tools are designed to guide you through the process and ensure nothing slips through the cracks.
In the end, the goal is to make the home appraisal process as smooth and successful as possible. And remember, preparation is the key to success. So take a deep breath, roll up your sleeves, and let’s get your property ready for its big day. You’ve got this!
by Conrad Meertins | Nov 11, 2024 | Valuation
Here is a shocking truth – When it comes to appraising a property, not all homes are created equal.
This article aims to shed light on the specific factors that differ when appraising a condo versus a single-family home, and why it’s crucial for real estate agents, buyers, and sellers to understand these nuances.
How the Type of Property Affects the Appraisal Process and Final Valuation
On the surface, the difference between a condo and a single-family home might seem like a matter of maintenance. However, from an appraisal standpoint, various factors affect the process and final valuation. Let’s delve into what goes into appraising each type of property.
What Goes Into Appraising a Single-Family Home?
The general process for a single-family home appraisal includes collecting property data, such as land, square footage, home condition, and improvements. Then comes the all-important market analysis and comparable sales analysis.
These factors help the appraiser to have a comprehensive view of the property’s worth, setting the stage for its market value.
What Goes Into Appraising a Condo?
In contrast, condo appraisals focus on different aspects. Here, property data collection includes common areas and amenities, Homeowners Association (HOA) fees, the percentage of owner-occupied units, and information about the subject project. Comparable sales within the same building or complex are always preferred if possible.
For instance, I once appraised a stand-alone condo that looked like a single-family home with land. However, the owner only owned the interior of the unit, not the land, making comps from typical single-family homes not suitable. Understanding these subtleties is vital for an accurate appraisal.
Key Differences Between Condo and Single-Family Home Appraisals
Ownership Elements: Single-family homes include land, while condos focus on common areas.
Comparative Sales: Condos require comps from other condo units (in the same building or complex whenever possible)
Appreciation Rate: Condos typically appreciate at a slower rate compared to single-family homes.
How Realtors Can Help
Real estate agents play a pivotal role in guiding their clients through the appraisal process. It’s not uncommon for people to look at the percentage increase in home values and assume their condo is appreciating at the same rate.
However, this is usually not the case. Moreover, choosing an appraiser experienced with the specific type of property is crucial for an accurate valuation.
The Importance of Expertise in Appraisals
Expertise comes into play when gathering information about a condo project. An unaware appraiser may state that certain info is unavailable, but an expert knows where to look.
For example, the county clerk’s office can provide a wealth of information about the condo project, from the legal description to the number of units in the project. Mastery of this small learning curve can make a significant difference in the appraisal process.
In summary, understanding the nuances between condo and single-family home appraisals can make all the difference in a successful real estate transaction. Choose your appraiser wisely and arm yourself with the right information for a seamless appraisal experience.
Contact us today for a free consultation and learn how our appraisal services can help you achieve your real estate goals.
by Conrad Meertins | Sep 2, 2024 | Valuation
In our fast-paced world, everyone craves value—and we want it instantly. But when it comes to your home’s value, quick fixes aren’t always the best solution.
I’ve previously discussed the pros and cons of online calculators, but today, let’s explore three critical reasons why DIY valuations can be risky:
- Failing to Identify the Underlying Problem
- Lack of Access to Comprehensive Data
- Insufficient Analytical Skills and Tools
These three pitfalls are interconnected—missing the underlying problem leads to misinterpreting the data, which then compounds the errors in your valuation. Let’s delve into each of these in more detail.
1. Missing the Underlying Problem
This might sound surprising, but every house has a “problem” that impacts its value—even brand new ones. By “problem,” I’m referring to a valuation question that must be uncovered to determine the true worth of the property.
For instance, I was once asked to appraise a new construction home in a mature neighborhood where no new homes had been built within a half-mile radius for three years. The key question—or problem—was, “How does the lack of recent new construction sales in the area affect this home’s value?”
Identifying the underlying problem is crucial because it shapes the entire valuation approach. Questions like, “When was the last new construction sale in this area?” or “Are there similar new constructions nearby?” become central.
Without pinpointing the problem, a DIY valuation will likely miss the mark, leading to a flawed estimate.
2. Lack of Access to Comprehensive Data
Where do most people turn for home sale data? Sites like Zillow are common, but they often provide incomplete information.
Realtors have access to gold mines like the Multiple Listing Service (MLS) and Property Valuation Administrator (PVA) websites, which offer more extensive data, especially for unique properties like new constructions.
However, simply accessing data isn’t enough; knowing how to extract and interpret it is key. Early in my career, I made the mistake many DIYers make today—relying on a few neighborhood sales to determine value.
But it’s vital to understand the highs and lows of the market area before drawing conclusions. A DIY valuation might overestimate a property’s value, missing critical market trends that indicate the area can only support 80% of the DIY estimated price.
3. Insufficient Analytical Skills and Tools
Data analysis is where many DIY valuations fall short. Imagine trying to assess a neighborhood with 200 recent sales—how do you determine which ones are relevant? Should some sales be excluded? What are the quarterly price trends?
These questions may significantly influence the final value and answering them requires more than just raw data—it requires the right tools and expertise.
Online resources might offer broad figures, like the median sales price for homes in Louisville, but Louisville has over 100 neighborhoods, each with its own unique market. Without the ability to analyze data specific to your home’s market area, a DIY valuation is bound to be inaccurate.
Wrap-up
In summary, DIY home valuations often fall short because they miss critical steps that professional appraisers never overlook. First, they fail to identify the underlying problem that drives the property’s true value. Without pinpointing this, the entire valuation process is compromised from the start.
Second, they lack access to comprehensive data that realtors and appraisers use to make informed decisions.
Lastly, even when data is available, DIYers often don’t have the tools or expertise needed to analyze it properly, leading to inaccurate and potentially costly errors.
As an appraiser, I approach each property with a well-honed process that starts with identifying the key valuation question, gathering and analyzing data from multiple trusted sources, and using advanced tools to ensure every factor is considered.
My 20+ years of experience, coupled with continuous learning and adaptation, allows me to deliver precise, reliable valuations that help you make informed decisions and maximize your property’s value.
If you’re serious about understanding your property’s true worth and making the most informed decisions possible, skip the DIY route. Let me provide you with a comprehensive appraisal that gives you the confidence to move forward without leaving money on the table.
Ready to get started? Contact me today to schedule a professional appraisal and ensure you’re making the best decisions for your property. Your home is one of your most significant investments—let’s make sure you treat it as such.
by Conrad Meertins | Aug 12, 2024 | Valuation
We all obsess over condition—whether it’s the state of our bodies, our cars, or our homes. But when it comes to our homes, does obsession really matter? Sometimes, we get so fixated on the imperfections that we forget the bigger picture, especially when the market conditions take the driver’s seat.
Today, I want to share some observations on how a home’s condition influences its ability to sell, particularly in different market scenarios. By the end, you’ll see how I, as an appraiser, account for condition when preparing reports.
Condition in a Seller’s Market
In a seller’s market, where inventory is low and demand is high, condition still matters, but it’s not always the deal-breaker you might think. Buyers are often so eager to secure a home that they’re willing to overlook flaws and even pay a premium for properties that wouldn’t ordinarily justify such prices.
Why? It all comes down to competition. Think of an auction—when everyone wants the same item, the bidding war pushes prices up, even if the item isn’t perfect. Similarly, in a hot market, buyers are more likely to bid on a home, even if it’s not in pristine condition.
This is where knowing the market environment becomes crucial. If you’re a seller, having a trusted appraiser or realtor who understands the market dynamics can give you a significant edge.
Pro Tip for Realtors: While the market may allow for higher asking prices, be careful not to overestimate. The appraiser still needs to justify the price based on comparable sales, so ensure there are similar homes in the area that have sold for similar prices despite their condition.
Condition in a Buyer’s Market
Now, let’s flip the script. In a buyer’s market—high inventory, low demand—buyers can afford to be picky. This is when condition becomes a critical factor in a home’s saleability. Just to clarify, we’re not in a buyer’s market right now, so don’t get too excited. But if we were, the scenario would be quite different.
Imagine walking into a burger joint where a cheeseburger and a sirloin steak are the same price. Which would you choose? Most would opt for the steak, of course!
In this analogy, the steak represents a home in great condition, while the cheeseburger is a home that needs some work. Both are listed at similar prices, but with no competition, buyers will naturally gravitate toward the better option.
For Sellers: In such a market, if your home is in less-than-perfect condition, be prepared to adjust your asking price to make it more appealing. Remember, when buyers have options, they’re likely to go with the one that offers the best value.
Accounting for Condition in an Appraisal Report
So, how do I, as an appraiser, adjust for condition? Let me walk you through one of my methods. When appraising a property, I start by defining criteria that help me find comparable homes on the market.
For instance, if I’m appraising a 1,000-square-foot, 3-bedroom, 1-bathroom ranch-style home, I’ll look for similar homes that sold within the past year, within a mile of the subject property.
In a densely populated area, this approach should yield around 30 comparable homes. Next, I analyze their condition via the local MLS, assigning each a condition rating (Fair, Average, Avg/Good, Good). Once I have this data, I create a pivot table that gives me the median sale price for each condition category.
Here’s an example of what the data might look like:
|
Condition
|
Median Sale Price
|
| Fair |
$160,000 |
| Average |
$190,000 |
| Avg/Good |
$210,000 |
| Good |
$250,000 |
This table tells me that in this market, buyers are willing to pay $20,000 more for a home in Avg/Good condition compared to one in Average condition, and $60,000 more for a home in Good condition. This is a defensible, market-driven approach to account for condition when setting a list price or producing an appraisal report.
Conclusion
As you can see, condition is important, but the type of market you’re in dictates how important it is. In a seller’s market, it’s less of a factor; in a buyer’s market, it’s crucial. By analyzing similar homes, you can quantify just how much more (or less) someone might pay based on condition.
The bigger the sample size, the more reliable the analysis. I aim to gather at least 30 homes to ensure that my clients receive market-based evidence on how condition affects sales price.
So, the next time you think about a home’s condition, consider the market first. Act with knowledge, consult with a trusted appraiser, and set your price accordingly—don’t let condition become an obstacle to selling your home.
