Homeowners are often very confused about how much improvements will impact the appraised value of their properties.
Major improvements such as a new pool, a remodel or an addition to a home will almost always add value, as most people know.
But confusion arises with minor and/or “functionally obsolete” improvements – b/c the markets are just not that sensitive and/or b/c some improvements simply do not add value.
Examples of improvements that usually do not influence appraised values include new fixtures, new appliances, new paint, unpermitted outbuildings, and minor landscaping improvements.
I should add that homeowners who have poured hours of DIY labor into various improvement projects are often the most frustrated about appraisal results.
$200,000 UGLY WALLPAPER
Functional Obsolescence is another concept homeowners often have trouble grasping.
We once had homeowners spend $200,000 on really ugly bronze wallpaper for their foyer and then insist that their home should appraise for $200,000 more b/c of the wallpaper.
But, the ugly wallpaper probably decreased the value of the home, and it was a near perfect example of “functional obsolescence.”
The idea for today’s blog was prompted by this blog from Ryan Lundquist, a very experienced appraiser who writes the best appraisal blog I have seen (I love reading it in fact).
I blog about appraisal issues often but Ryan knows about 10,000 more than I have ever known, and he writes beautifully.
I highly recommend that every agent subscribes to Ryan’s excellent blog; it will make them much more knowledgeable on the appraisal front and therefore much better able to represent their clients when appraisal issues arise.
The blog is also just fun to read.
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