The quality and condition of your home are determined by numerous items, including the age of improvements, materials used, updates or upgrades, replacement of mechanical systems, and deferred maintenance.
Significant Improvements
We might assume that certain updates or improvements will affect appraisal values–but the results often times will surprise us. Improvements are valued based on market data, not what they cost to complete. The market will show what typical buyers will pay for specific improvements, amenities, etc. It will vary from market to market and state to state. An IG pool in Florida will be worth a lot more than in WI; a garage in Manhattan will hold more value than a garage in Buffalo.
Examples of home improvements that will have a major impact on the appraisal regardless of the region would be additions including baths and bedrooms, or major structural repairs such as stabilization of a crumbling foundation. The market expects items to be upgraded over time to keep the property in average or better condition. Without replacing or updating items when they’re in disrepair, the home’s value will suffer. Some improvements, like removing a bathroom to expand a closet, or combining two smaller bedrooms into one large one, can actually lower the value.
Less Significant Improvements
Less significant improvements, like cosmetic upgrades, can impact the value, depending on what they are, but often times won’t provide an increase the borrower expects. For example, replacing HW flooring with tile will likely not impact the value, as this is more of a personal preference than an upgrade. On the other hand, if you replace burnt orange shag carpet with top of the line marble, that will impact the overall condition of the property, which is considered in the value. Other items that would improve Condition ratings and impact value are rehabbed baths, new siding, or replacement of a worn roof.
Improvements Kitchen/Baths on URAR
One important item to note is on page 1 of the appraisal report. In the Improvements section, the appraiser reports updates to the Subject. The first sentence you see here is UAD format where only the kitchen and bath updates are reported. UAD requires the appraiser to note if there were updates to the kitchen or baths within the last 15 years.
So when you see “No updates in the prior 15 years”, this does not mean there have been no updates to the property at all. It simply means there have been no updates to the kitchen or baths. If there was a new roof put on 3 years ago or a new heating system installed 5 years ago, the appraiser should note that in a separate comment. The property on the screen had updates 6-10 years ago, with a separate comment afterward stating no other renovations were observed. While recent updates to the kitchen and baths are reported separately here, they are also considered in the overall Condition rating for the Subject.
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