This month’s discussion at the Phoenix IROC (Independent Rental Owners Council) meeting an appraiser gave us some of his thoughts and answer to members’ questions. I have included those of particular interest and those I agree with.
Q. What increases value of a property and what reduced the value?
A. Generally speaking, the value of a property is increased if it is improved carefully and with thought. Here are some thoughts.
• Improvements can raise the value of a property but you should not over improve the home. If other homes in the neighborhood like Maryvale in Phoenix, have Formica counter tops then don’t put in granite. A reasonable and appreciated upgrade would be tile counter tops. If the neighborhood is North Scottsdale or Paradise Valley then you need to put in higher grade upgrades like, travertine floors, rare wood cabinets and of course premium counter tops like granite. In other words allow your home to be better but not much better, because you will never recover the cost of the remodel.
• Spending $50,000 on a kitchen, while your living rooms have old carpet and the bathroom cabinets are old makes little sense either. An appraiser may give you value for the kitchen but the rest of the home will degrade it to an average. The same goes for doing partial flooring. If your entry has tile but your kitchen floor still has linoleum, you will not get the credit for the tile.
• Additions to a home or other property need to be permitted. Not having a permit puts you at risk of not getting credit for the additional square footage, even if it’s within the code guidelines. Red flags are raised when the county assessor’s recorded square footage is different from what the appraiser has. Your home may get the credit or it may not. Even if the appraiser includes it, she/he may not give you full value or the financing underwriter may not allow.
Q. What about Zillow.com? A. Zillow.com has good marketing. They thrive on generating traffic. They make people happy by inflating their inaccurate values 5-10%. This is a good site to visit as a starting point. It is not accurate, it is not an appraisal. Zillow.com does not take into consideration competing active homes. To get the best valuation of a property get an official appraisal. In this market it’s more important than years past to have the value correct when placing a home on the Phoenix real estate market. Speak with your Realtor to see if he/she recommends an appraisal for your home. Each home is different. It’s easier to price a newer track home then 30 or 50 year old home. Other notes:
• When evaluating your home and comparing it to others, remove extreme sales. If home sold for much more than others, then there must be a reason other than market driven forces. If it sold for much less, it may be a foreclosure, a fix-up or a distresses seller. Both of these, if used, will skew the results.
• Look at active homes on the market. What are the lowest prices, similar, homes on the market? That is your competition.
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