Determining Factors for Property Values

[Thirteen]

This is a fly-by, but I know we have a lot of experience on this board with home ownership that goes beyond me, so: How is property value determined/assessed? I know when you buy, the bank/lender comes out to determine if the house is worth the asking price, but nothing else.
I would sincerely appreciate any advice on this matter.

Thank you in advance, IMSNers!

[Vanquisher]

It's all about what the comparable are. What have recently comparable houses sold for in your area. I just had an appraisal for our refi, and that looks to be the biggest factor to me.

[SoonerTexan]

Are you talking about for tax purposes or just in general?

[ladymoreta]

Ours was almost entirely based on comp values - prices homes in the neighborhood sold for recently. It's calculated into average price per square foot. Our realtor let us add an extra $1000 for the new HVAC system, storm shelter, and roof. Of course, that was negotiated away. Improvements that don't add square footage generally didn't seem to affect house price all.

[bobk]

Always start with location, which is where the comps come in. How are the schools? Is the house near public transit/interstate on ramps or close to shops, restaurants or other amenities. Is it across the street from a dump or along a noisy roadway? Next look at the size and amenities of the property. Square footage, number of bathrooms, garage, yard, etc. Finally, the condition of the home. Is it well maintained, ready to move in, have the kitchens and bathrooms been updated recently?

I'd say these are most important in terms of market value. When a property is assessed for tax reasons, there's usually a much simpler formula, because its hard to fairly quantify what the market assessment. Often it's nothing more than square footage of house and/or size of lot.

ETA: Status of electrical, HVAC systems and roof conditions are very important too. It can cost thousands to repair and/or bring these things to code, which will affect value.

[spotty_dog]

Realtors will do a market analysis to figure out what people will be willing to spend on a house, to help determine the listing price. There are qualifications and certifications that Realtors can get to make them better market analyzers. So that's the first "value judgment" on a home.

Then if you're taking out a loan for the purchase, the lender will require a professional appraisal. The appraiser follows certain industry standards, and the two I've had have filled out Uniform Standard something-something forms that carefully lay out the analysis used. They'll choose 4-5 comparable homes of roughly similar square footage that have sold in the last 6-12 months, either in your same neighborhood (so equally desirable, same school district etc.) or if necessary they'll range a little farther. My first appraisal included a comp from over 20 miles away because our property is so unique and sales were so slow; our second appraisal only extended their range by a mile or so from their usual but included the listing price from a house that was still on the market.

Then they have a formula for comparing your home to the comparables, making adjustments for age, square footage, number of rooms, garage bays, size of the property, quality of the finishes, view, hot tubs, etc. etc. They get an adjusted price relative to each comparable, then average them.

The form also has a couple of other standard ways to come at the appraised price, like some sort of extrapolation of how much rent the place could be expected to charge? But my appraisals have both said that the other methods are outdated and inaccurate. That might just be in my area.

So, our house is unique and sales are slow in my area, so some of our comparables were places that were on the market for over a year and had slashed prices drastically in order to sell, which negatively impacted our home value. But...that's the market, so I guess it's also fair.

The third way that value is determined is the tax assessment. That's based on the information that the assessor's office has, which is very objective data and doesn't have hardly any subjective quality to it. My county uses "Computer Assisted Mass Appraisal", and honestly the value they use is not very closely related to the home's actual current market value.

[Thirteen]

I knew you guys would have in-depth explanations! Thank you!

(My neighbor is trying to claim that my chickens, not visible or heard from their happy home in our side yard, are bringing her property value down...)


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[GreyhoundsRUs]

I knew you guys would have in-depth explanations! Thank you!

(My neighbor is trying to claim that my chickens, not visible or heard from their happy home in our side yard, are bringing her property value down...)


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I think it's her bad attitude Plus, are they looking to sell soon?

[SuzySunshine]

Ridiculous! If your city allows you to have chickens she can go jump off a cliff! Is this the same neighbor that put up a fence last week? What is she complaining about? UGH! I hate whiny neighbors!!

[ladymoreta]

I had a feeling that's what this was about. It shouldn't have any tangible effect on her house's value. It's not like you've done any re-zoning or anything. I just don't understand why it's such a big deal to her! Ugh, people are annoying!

[Pollyanna]

(My neighbor is trying to claim that my chickens, not visible or heard from their happy home in our side yard, are bringing her property value down...)


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Well that could be true in perceived value. Buyers looking at homes, if all things are equal, might not buy next to someone with chickens (no offense) because of a perception that the property may not be maintained in the future or that the neighbor with chickens may branch out with other livestock (especially if there is no HOA limiting animals etc). If she is trying to sell her home in this market she might just be panicking about every little thing. But I don't believe her real value is effected by your sweet chicks.

[scrub-jay]

I've known cities/towns with regulations against crowing chickens (think roosters), but not hens unless they take to crowing which happens, but is rare. Your neighbor is ridiculous.

[bobk]

Well that could be true in perceived value. Buyers looking at homes, if all things are equal, might not buy next to someone with chickens (no offense) because of a perception that the property may not be maintained in the future or that the neighbor with chickens may branch out with other livestock (especially if there is no HOA limiting animals etc). If she is trying to sell her home in this market she might just be panicking about every little thing. But I don't believe her real value is effected by your sweet chicks.

I was thinking the same thing. Even though you do a good job with the chickens, at some point you could sell your house and the new people might have noisy roosters or not clean up after them, causing a stench. As Pollyanna says, all other things being equal, there would be a risk, however minor, of turning potential buyers off.

I'd say that if the chickens can't be seen, heard or smelled by someone touring the neighboring property, it's not legit concern since no one would know.

[SoonerTexan]

Our neighbors in our first place had chickens. I didn't know until our landlord told me a year into our lease. DH didn't know until I told him a week ago. Your neighbors are stupid

[Thirteen]

And since she just put up that big stupid privacy fence, no one would know.

Did I mention it's an 8 ft tall fence, with 2 ft. concrete footings the entire border? It's technically 10 ft. tall. The "Great Wall of Chicken"...