THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, January 14, 1995 TAG: 9501120293
SECTION: REAL ESTATE WEEKLY PAGE: 02 EDITION: FINAL
COLUMN: What It's Worth
SOURCE: Thomas Tye
LENGTH: Medium: 81 lines
I could not buy the house that I wanted because the appraiser said it was worth $5,000 less than the contract. I looked and looked at houses and felt like this was a good buy, so did my agent.
How could I have been so off on the price?
When a property is appraised, the primary method used is called the market approach. The appraiser compares the house being appraised to similar properties that have sold recently in your area.
Through a series of dollar adjustments for major differences between the house being valued and the ones that have sold, a price can be estimated.
During the buying process the home buyer looks only at houses available for sale, and not houses that have sold. This makes sense since those already sold are not available.
The prices the buyer is quoted are the asking prices, not the actual sales prices. Many times prices are negotiated and the asking price is only a starting point.
This may have been the case in your situation since is sounds like you did your homework during the shopping process and the property was reasonably priced in comparison to other asking prices.
However, it was not reasonably priced in comparison to other houses that had actually sold.
You should ask your agent, prior to submitting an offer, to give you a list of houses that have sold in addition to ones that are offered. This will allow you to make a more informed decision when presenting your next offer.
You were fortunate to have the house appraised since it appears that the appraiser has saved you from making a $5,000 mistake. Ambiguities of siding
A number of homeowners in my neighborhood have added vinyl siding to their house. I am considering it but wonder how much it will increase the value.
Will I be able to recoup my investment when I sell?
Vinyl siding has been popular for many years to cover asbestos shingle, wood siding or pressboard. It requires no painting and is effectively maintenance free.
I assume that you would be adding the siding to a home that is not relatively new. If so, you will likely increase the value - that's the good news.
The bad news is that the value usually does not increase by as much as the cost.
The fact that a number of homeowners in your area have already added siding is a good indication that you will be able to recoup at least part of your investment.
Since it appeals to a number of people who already live in your area, it would likely appeal to a potential buyer.
The questions is, how much more would a typical buyer pay for your house due to having this feature.
To prove how much more your home would be worth with this improvement it would be necessary to compare the sales price of two houses, otherwise identical, with and without this feature.
The difference is the value attributable to the siding.
Short of having this information, I am aware of a study that was prepared several years ago on a subdivision in Norfolk that indicated the value would go up by about $1,200 to $1,500 with this improvement.
This was in an area with $40,000 to $50,000 houses that contained about 1,200 square feet.
If your home is larger, and in a higher price range, you would likely experience a larger increase.
You will also benefit from having the siding by reducing your maintenance and painting costs.
Between the increase in price and the maintenance savings, it appears to be a reasonable addition as long as you can get it done for a competitive price. MEMO: Thomas Tye is a Member of the Appraisal Institute and is a Senior
Residential Appraiser. He has evaluated commercial and residential
property in Hampton Roads for more than 15 years. Send comments and
questions to him at Real Estate Weekly, 150 W. Brambleton Ave., Norfolk,
Va. 23510. by CNB