Whether it be the value of a kitchen remodel, a bath update or a swimming pool: How does an appraiser decide what adjustment should be made? Unfortunately, the answers are complicated and depend upon many factors including the neighborhood, segmented market, climate, and even housing and economic trends. For example, pools may be considered a negative in a weak economy and in entry-level markets due to the additional maintenance they require.
The National Association of Home Builders (NAHB) has created a tool to estimate the average price of a home with various features in different parts of the country and help homeowners have a better understanding of how the market reacts to key home features. By changing the age, features, location and other inputs, the tool can be used to estimate how a particular amenity – for example, an extra bathroom or waterfront location – tends to impact the price of a single family detached home.
The amount of geographic detail in the survey is somewhat limited, however, so the output of the price estimator is an average price for a standardized home (that is, one with a given set of features) across a broad Census region, not the price of a particular home in a specific neighborhood. House prices within a region may vary substantially. Also, no survey or statistical model can possibly capture all features that potentially affect house prices. Hence, there’s always a chance that a particular feature in the model is acting partly as a proxy for others. If homes with fireplaces tend to have higher quality decorative hardwood trim (a feature not available in the data), for instance, the estimated impact of a fireplace could be picking up part of the effect of the hardwood trim, as well as the value of the fireplace itself.
If you would like to know how new or remodeled features of your home may effect the value in your specific market, please contact me!