This morning we were visited by America First Credit Union and an Appraiser, Brad Myers, from Myers Appraisal Group.
There is a difference between the way Realtor’s pull comparable homes, and the guidelines appraisers must use for determining appraised value of homes. Here are a few insights of the things appraisers look at in determining home values in Logan Utah.
Appraisers really work for, and are trained by underwriters. It is the underwriter’s guidelines they must meet, so those are the standards they use in determining market value. Their job is to satisfy the underwriter, who ultimately pays them. Real Estate Agents are looking for market value based on what buyers will consider market value.
While underwriters guidelines can be strict, sometimes they aren’t possible to meet, especially for Cache Valley Real Estate. As long as he explains different comparables, and why they were used, he can usually get away with things beyond the standard guidelines for properties that don’t have ideal comparables.
One of the big differences with how real estate agents typically determine market value, and how he determines value, is with the way basement square footage is calculated compared with main floor square footage. Basement Square footage is typically $10-15 per square feet. Main floor square footage is typically given a value of $30 – $35 square feet. Really nice homes can have appraised values of more than $45 a square foot. Each particular room is worth about $3,000 or 4,000.
For older homes, Brad doesn’t really do age adjustments for homes built between 1890-1940. He says that these type of homes are all built about the same.
Upgrades to homes don’t yield the return in value that equal the cost of the upgrades. He has a guide book that estimates values of specific home improvements, and what percentage of their cost actually improves value.
When there are good comparables of homes, the most important factors for underwriters are style, age, and square footage. He always puts two properties on it that have sold within the last three months, and then the most similar properties, the best real comparables, even if they’ve sold 8 or nine months ago. He’ll even include active listings, comparables that are for sale when there aren’t perfect comparables. This is what Realtors do too, which in the past has been one of the main differences when there hasn’t been very many homes sold over the winter.
For old beater houses in the country, similar acreage is the most important factors. For excess land in Cache Valley, the value he looks at is about $20,000 per excess acreage. In the more remote parts of Cache County $15,000 per excess acre is about the going value difference.
When homes have external obsolescence, things like busy roads, determining the reduction in value is really a guessing game. There is no way to figure out the difference of a house for sale on a busy street, vs. a quiet road. A bigger home is looking at an even bigger adjustment for thinks like busy roads or being located near a gravel pit.
Brad says that he hasn’t seen much of a drop in Cache County Real Estate Values moderate sized homes, the price drops are with the upper end homes, and vacant land values. Utah as a whole has about five to ten years worth of inventory of vacant lots.