A common question is what do we as appraisers look for when appraising a home? We’re going to tell you about it here and give you some handy tips right away.
Unlike with selling a home, where you want everything super tightly clean and neat, that should have no bearing on the appraisal. After all, an appraiser is supposed to look with very different eyes than a potential buyer.
You will not be able to influence most things (at least in the short term). Nevertheless, we do give you some tips on what you can do to get the highest possible value appraised.
Among other things, this is what an appraiser pays attention to during the appraisal:
Location
Location is often a factor on home value. Is a home in the center of Amsterdam or is a home in a suburb of Almere?
That will make a big difference in the value. To arrive at a value, an appraiser will look for as many and as closely comparable homes as possible in the immediate vicinity of the property to be appraised. So an appraiser will never compare a home from Amsterdam to a home in Almere.
Parcel
We get the size of the plot from the land registry. Usually a property has 1 plot, but it does not have to. There may also be 1 or more additional plots belonging to the property that were later added. The larger the total plot at a property, the more value it has.
In the case of apartments, a plot does not apply. Only the size of the garden if there is one (for example, in the case of ground floor housing).
Finishing level
The level of finish is a very important factor in rating. In particular, we look at how high-quality, modern, luxurious and tastefully finished a home is. In the optimal case, a home:
- Finished with good materials (an expensive Bulthaup kitchen can score better than a cheap Gamma kitchen)
- has not been cut back (think also kitchen with all kinds of expensive built-in appliances)
- and is especially tastefully finished (a very modern kitchen that is pink is not good for the value, because hardly anyone wants a pink kitchen)
Efficiency
The appraiser also wants to know if what he finds inside and around the home makes “sense.
There may be a beautiful 120m2 home with 4 bathrooms. That doesn’t make sense. Or there is, for example, a house with 4 bedrooms of which 2 bedrooms are so small that they cannot actually be used. Another example is that there are no toilets upstairs at all. All do not make sense.
Simply put, we are really looking through the eyes of potential buyers of this property. Those potential buyers we call “the market. And how would “the market” now react to how this property is constructed and laid out?
Property situation
Is the house and the land it stands on in full ownership or is it a leasehold right. And if it is a right of leasehold, what are the conditions and costs associated with it? Sometimes a right of superficies or other rights also apply.
What we also do see a lot is that a right of leasehold applies that is perpetual (forever) and is also perpetually redeemed. In that case, something like this can actually be compared to a similar home that is fully owned / on its own land.
Outbuildings
Think of outbuildings as garages, sheds, garden sheds, storerooms, etc.
If you have 2 similar homes and 1 of those homes has a nice big garage with the home and the other has nothing of the sort, you can hopefully imagine that the home with a garage will score better in the appraisal in this area.
Maintenance
The maintenance of a home is a very important component in determining the appraised value. During the appraisal recording in and around the home, the appraiser is required to prepare a building record in which each building component is valued for quality. Something can have the following scores:
G – Good
R – Fair
M – Moderate
S – Bad
NO – Further investigation
NW – Not observable
If an appraiser values a building component (e.g., the gutters, gables, floors, walls, roof, etc) at MATTRY or REDUCED, the appraiser is required to include the estimated repair cost for that component in the report.
For example: the roof is bad and needs to be replaced. The appraiser includes a cost of €30,000.00 for this. Also, the facades all need to be repointed. An expense of, say, €8000. The total of these cost items weighs on the appraised value.
Now, however, an appraiser does not (at least in most cases) climb up the roof with a ladder or crawl all the way into the crawl space to get all the way under the floor. What the appraiser cannot see he will also value “Unobservable. So if an appraiser appraises your house and does not see that the roof is all rotten and he does not hear this from you, then this will not affect the value either.
The living area
And, of course, there is the living area. In fact, in most cases this is the most heavily weighted component to the appraised value. You can read how this living area is calculated in our blog, “How to calculate living area of your home.”
Obviously; the larger the living area, the better it is for value. Does the living area of an office in the garden also count? In short, yes. After all, you read that again in our blog, “Does the living area of an outbuilding count if it is not licensed?“
We give you some very important tips & tricks later in this article on how you can influence this for more living space. So stay tuned…
The size of other spaces
If you have a super large roof terrace and other homes don’t, then you score better on the component called “building-related outdoor space” for rating your home.
If you have a larger storage space attached to the house (indoor space) or separate from the house (external storage space), you score better on these components.
The Association
For apartments, the appraiser looks at the health of the Owner’s Association (AOC). He then looks at, among other things:
- Is the CoE registered with the Chamber of Commerce?
- Does the VvE save money monthly in a special VvE bank account?
- Is there a multi-year maintenance plan (MJOP)?
- Is the money the VvE is saving enough to meet the budgeted maintenance items from the aforementioned MYP or are they going to run short of money? If not, this can be a dealbreaker for lenders of potential buyers and the home is less attractive to buy.
- If there is no MYP, does the CoE save at least 0.5% of the rebuild value each year? If not, this could be a dealbreaker for lenders of potential buyers and the home is less attractive to buy.
- Is there overdue maintenance and if so is there enough money in the CoE for this? Example: we regularly see that a roof and/or window frames and/or down pipes are all in need of replacement and the VvE cannot borrow it. The VvE members then have to contribute this “out of pocket” or the VvE has to take out an expensive loan for this. In both cases, these are things that can have a negative impact in the appraiser’s valuation.
Sustainability
The energy label has become incredibly important to buyers. A home with an energy label C will score much better in value on this component than one with an energy label G.
Arranging an appraisal
After our article, you’ll know exactly what an appraiser looks for! Good luck and if you want to have your home appraised, we can help you with that.
Do you still have questions regarding appraisals or would you like more information about what an appraiser looks for? Then you can contact us without obligation.
Call or app appraiser Floris at 06-47470404 or floris@vkmakelaars.nl or just fill out this form.