Home values are determined by much more than the home itself. There are many factors outside your control that have a direct effect on your property – which can be either good or bad. You may be able to tolerate your neighbor's overgrown lawn, but you can be sure a home appraiser will not.
While you'd love to be able to set your own price of what you think your home is worth, the bank will no doubt want to see something more objective before it lines your home up with a mortgage for the next buyer. This is where the home appraiser's job comes in during the home buying and selling process. If you've worked hard and steady for several years upgrading and improving your home, the home appraisal process can be very rewarding – we all like to see our hard work pay off.
When the appraiser, equipped with a checklist, comes by to evaluate your Idaho home, one of the things he/she will be looking at is the surrounding area. In some cases, a deteriorated yard or a persistent bad smell can bring down the value of homes in the nearby vicinity by up to 5 to 10 percent, according to Richard L. Borges II, the president of the appraisal institute, an international association of real estate appraisers. These bad neighbors, whether it's a smell or a dilapidated property, are referred to in the appraisal world as "external obsolescence" -- depreciation caused by issues outside of the property and the homeowner's hands.
You may not be able to force your neighbor to change the color of their home's paint or change other undesirable exhibits that may be contributing to the neighborhood's eyesores -- but you can ensure no code violations are present before you take the step of calling a home appraiser. Certain things violate local ordinances, like unregistered and junk vehicles, accumulation of trash, junk or garbage, farm animals in residential areas, or trees and shrubs that may be blocking vision of the road. These are just a handful of the things you can do something about as a homeowner.
Your appraiser will also consider nearby schools, shopping, ease of transportation, and the comparable prices of homes that are up for sale or just sold in the area. There's a lot that goes into the appraisal process, but devaluations caused by factors outside your control can be particularly frustrating. Oftentimes, external obsolescence has little to do with the neighbors. One strong example is a highway. Most folks don't consider living right next to a constant buzz of 65 mile an hour traffic a desirable situation. Others might find the reduced price tag of living adjacent to a highway enough mitigation to deal with the issue. Other examples include high voltage power lines, and commercial buildings.
Alternatively, there are several outside factors that can help your home's value. At the top of that list is a high quality school district. Potential home buyers out there need not have children to benefit from living near a great school. When it comes time to sell, homes in proximity to a good school system will be opened up to a wider interested audience of home buyers, and a potentially higher asking price. Another outside influence of home price is open, green space. In appraisers' eyes, these green spaces and parks are thought of as "positive externalizations" for the homes that surround it. One unsurprising outside force to a home's value is proximity to a pond, lake or some other type of water. Waterfront property is seen by the Appraisal Institute as one of the best and easiest decisions to make if you're all about home value. Houses with views of a lake jumped in price by 94 percent, while homes directly on the water had a markup of 124 percent to 287 percent.
Being aware of "external obsolescence" as well as other factors, is a great reminder that when buying a home, you're also buying the neighborhood. Owning a home is not all about what's in between the walls.
Hughes Real Estate Group assists both buyers and sellers across the Treasure Valley, including Boise, Meridian, Eagle, Nampa, Caldwell and Kuna. To start your search for the perfect Idaho home, give us a call anytime at (208) 571-7145, and one of our experienced professionals will be happy to help.