• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Sacramento Appraisal Blog | Real Estate Appraiser

Real estate appraisals for divorce, estate settlement, loans, property tax appeal, pre-listing and more. We cover Sacramento, Placer and Yolo County. We're professional, courteous and timely.

  • About
  • Appraisals
  • Order
  • Ask Ryan
  • Areas
  • Classes
  • Press
  • Trends
  • Share
  • Contact

appraisers give little value for square footage

Why do appraisers give such little value for square footage?

August 22, 2011 By Ryan Lundquist 12 Comments

Why do appraisers sometimes give such little value to something as important as square footage? It’s crazy that an appraiser gave $10,000 in value for 300 square feet, right? Maybe you’ve felt this way about an appraisal on your home or for one of your listings. Give me a minute to help clear up some of the confusion by explaining how appraisers are supposed to come up with value adjustments for house size.

Example 1: A Typical Size Scenario

Real estate appraisers should be giving value to square footage according to how the market sees the square footage. What does that mean? While it may cost $40,000 for a 400 square foot addition, based on an analysis of comps in a neighborhood, the appraiser might determine properties with an extra 400 square feet sell for $20,000 more than houses without that space. This means the market in this particular neighborhood really only rewards $20,000 in value for the size difference. This example of course assumes there are no other factors to consider such as lot size, location, upgrades, room count, financing etc….

Example 2:  The McMansion Mega House

Imagine your house is 6,000 square feet in a neighborhood where the largest model is 4,000 square feet. Do you think the market is willing to pay 50% more for you house because it is 50% larger than the 4,000 square foot model? Probably not. There are situations where the market is actually willing to pay very little or nothing for the extra square footage because it’s considered an overimprovement (or “superadequacy” for the fancy term). This can be very upsetting for home owners and agents, but the appraiser is not being mean or ruthless, but only interpreting the market properly (hopefully).

This is important to understand for the following reasons:

  1. Cost vs. Value:  Appraisers do not give value to square footage based on construction costs, but rather the reaction in the marketplace to extra size. Think of it in terms of a kitchen remodel or pool. Just because a kitchen costs $75,000 to remodel does not automatically mean you’ll see $75,000 in value in the resale market. Or while a pool may cost $35,000, resale value will very unlikely include the total cost of the pool. Cost does not always equal value.
  2. Additions & Conversions:  An addition or garage conversion may not always put your house on par with other larger houses. There are many factors to consider when it comes to valuing an addition. It’s important also to know the neighborhood before planning a huge addition because you don’t want to overbuild for the neighborhood.
  3. The Largest House:  Larger houses tend to have an overall lower price per square foot than medium-sized houses, so applying a straight cost-per-sqare-foot for the neighborhood may not yield credible results for the largest house.
  4. Big New Construction Premiums:  If you buy a newly constructed mega-house like in Example 2, you will likely pay a big premium for the extra square footage during the sale, but you may not see this premium again when reselling.
  5. Real Estate Agents:  Agents who know the local market and how appraisers should look at square footage will be able to coach and resource home owners about the process and what to generally expect.
  6. Unique Neighborhoods:  Each market is different. There is no standard price adjustment for appraisers to make because buyers in one area may be willing to pay more or less for size compared to another neighborhood.

All things considered, it’s not always easy to swallow that a big difference in square footage does not always translate into big value. Let me make it clear too that just because I explained how an appraiser is supposed to give value for square footage does not mean that the appraiser actually did that.

Any insight, questions or commentary? In appraisal reports you’ve read, how much value do you see appraisers give for square footage? I’d love to hear your comments.

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook or subscribe to posts by email.

Share:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)

Filed Under: Appraisal Stuff, Resources Tagged With: appraisal principles, appraisal service in Sacramento, appraisers give little value for square footage, appraisers in Sacramento, biggest house in the neighborhood, cost vs value, how appraisers figure out value, how do appraisers determine value for a house, largest house in the neighborhood, Lundquist Appraisal Company, Market Value, McMansion, new construction premium, Overimprovement, Real Estate Appraiser in Sacramento, resale market for large houses, Sacramento Real Estate, Sacramento Real Estate Appraiser, superadequacy, value of an addition

Primary Sidebar

Connect with Ryan

 Facebook Twitter LinkedIn YouTube Instagram

Subscribe to Weekly Post

* indicates required

Search this site

Blog Categories

  • Appraisal Stuff (408)
  • Bankruptcy (3)
  • Divorce (4)
  • Estate Settlement (6)
  • FHA Appraisal Articles (56)
  • Internet (53)
  • Market Trends (486)
  • Photos from the Field (126)
  • Property Taxes (70)
  • Random Stuff (231)
  • Resources (566)
  • Videos (161)

Blog Archives: 2009 – 2021

Lundquist Appraisal Links

  • Appraisal Order Form
  • Appraisal Website
  • Rancho Cordova Appraiser Website
  • Sacramento Appraisal Blog Sitemap
  • Sacramento Real Estate Appraiser Facebook Page
  • Twitter: Sacramento Appraiser (@SacAppraiser)
  • YouTube: Sacramento Appraiser Channel

Most Recent Posts

  • The housing market feels like chaos
  • An explosion of appraisal waivers. Is that good or bad?
  • Skyrocketing prices aren’t happening everywhere
  • The housing market feels like a crazy auction
  • Are appraisers keeping up with rapid price growth?
  • How much have prices risen since the bottom of the market?
  • How long can this market keep going?
  • What is your housing persona?
  • Rapid price growth & the Gilmore Girls next door
  • Are first-time buyers targeting 2-4 unit properties?

Disclaimer

First off, thank you for being here. Now let's get into the fine print. The material and information contained on this website is the copyrighted property of Ryan Lundquist and Lundquist Appraisal Company. Content on this website may not be reproduced or republished without prior written permission from Ryan Lundquist.

Please see my Sharing Policy on the navigation bar if you are interested in sharing portions of any content on this blog.

The information on this website is meant entirely for educational purposes and is not intended in any way to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or any other potential real estate or non-real estate purpose. The material found on this website is meant for casual reading only and is not intended for use in a court of law or any other legal use. Ryan will not appear in court in any capacity based on any information posted here. For more detailed market analysis to be used for an appraisal report or any appraisal-related purpose or valuation consulting, please contact Ryan at 916-595-3735 for more information.

There are no affiliate links on this blog, but there are three advertisements. Please do your homework before doing business with any advertisers as advertisements are not affiliated with this blog in any way. Two ads are located on the sidebar and one is at the bottom of each post. The ads earn a minor amount of revenue and are a simple reward for providing consistent original content to readers. If you think the ads interfere with your blog experience or the integrity of the blog somehow, let me know. I'm always open to feedback. Thank you again for being here.

Copyright © 2021 Sacramento Appraisal Blog