How much value did _________ add to my house?

I get questions all the time from home owners, Realtors and friends about how much value was added from projects around the house. Usually it’s for things like a kitchen or bathroom remodel, addition or enclosed patio. Sometimes it’s really about very minor updates though like the picture below.

How much value did landscaping around the mailbox add to this house?

Flowers in front yard

Breaking it down: Let’s consider the cost of this project. The home owner removed sod and then spent probably less than $50 to bring a little spice into this corner next to the driveway. Would this add value to the house? Would a potential buyer spend $50 more for this house because of the spruced-up landscaping? Or would typical buyers prefer to have sod around the mailbox instead, thereby resulting in a value reduction?

I know this seems like a silly example, but since I get questions like this all the time, it’s a perfect opportunity to offer some insight into appraisal methodology. Ultimately it’s much easier to isolate big-ticket items like a remodeled kitchen, built-in pool or addition to determine their value because there are likely other good examples in the market to help extract value. Appraisers can look at competitive sales with and without a remodeled kitchen, for example, in order to see how much of a price difference there is between the two sales. Assuming all other amenities are similar, the value of the kitchen would be the price difference between the two houses. In the case of landscaping around the mailbox, it’s probably a neutral situation that has very little or no impact on the value of the house. Appraisers don’t tend to isolate such small ticket items to find out if there is a value reaction in the market or not because buyers don’t make a purchase based on whether there is landscaping around the mailbox or not.

Do appraisers consider things like this in the appraisal? It’s common for appraisers to consider these types of small improvements in the overall final reconciliation of value though. This means if your house is fairly similar to the comparable sales used in the appraisal report, but you do have quite a few extra features like flowers in the yard, more expensive switch plates, upgraded hardware, updated ceiling fans, new light fixtures, etc… the appraiser can take all these things into consideration when rendering a final value in the report. All the “little things” can sometimes make a difference and cause the appraiser to reconcile value to a higher end of the range of values instead of a lower end of the range.

Would you pay $50 more for this house? What features do you think make a big impact on the value of a house?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

Comments

  1. Ralph R Valencia says

    Ryan,

    This one was always a hard one for me. As an appraiser, there is no real way to track the worth of one item without looking at the cost and subtracting a market based depreciation. However I do believe the little things you do have a tremendous affect on value because of the current dynamics in the market. Most buyers seeingly want ‘move-in’ ready homes…they don’t want to have to buy a house and put more mony into it. Investors are willing but the buyer looking to live in the home, most likely is not. The hardest thing about little things like this is the ‘curb appeal’ affect which drives the number of potential buyers into the property. A home with god ‘curb appeal’ is more likely to have an increased number of people drive by or want to look inside. With more people looking, there’s a greater chance of a buyer faster and at a price closer to the list price (not always of course). Homes with less ‘curb appeal’ tend to have a low number of lookers (hits), and wlll usually end in price reductions.

    So how much is it worth? I don’t know…..it’s almost impossible to put a number on something like curb appeal. But I do believe it to be a factor in most markets.

    • says

      Very well said, Ralph. Hopefully I articulated some of what you said above because that’s my take too. I also believe these things make a big difference (when you add up many things like this). I think sometimes the public things appraisers isolate every single feature of the house to determine value.

      It really helps value when investors flip properties and take care of the “little things” so the property really is in “move-in” condition. I’ve come to expect a polished product by some investors because I’ve inspected so many of their houses, but I tend to expect others to have a mediocre product because of cut corners. It’s also interesting to see who markets very aggressively and who tends to market their properties quickly and sell for lower. 🙂

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