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Why to Think Like an Appraiser When Buying Your First Home

by Alaina Tweddale |May 27, 2020

Buying a home — particularly your first — often feels like an emotional roller coaster ride (buckle up!).

How can you get a better handle on balancing the heart and the head?

Look to home appraisers, who do this every day. It's their job to review a home for sale with an unemotional eye, make a solid evaluation of its market value and determine that the asking price is fair. Generally, residential home appraisers follow guidelines set forth by the Uniform Standards of Professional Appraisal Practice (USPAP) and then layer on any additional requirements from the lender providing the home loan.

What if a first-time homebuyer could borrow from an appraiser's toolkit to tackle this important decision? Here is some wisdom from appraisers to help first-time buyers make a savvy choice when selecting a home.

Couple opening front door of new home

Can my real estate agent appraise my home?

"One of the misconceptions is that appraisals aren't needed because real estate agents can assign value," Vestal explains. "Real estate agents can handle the sale and facilitate the transitions, but an appraisal is much more analytical. We study the data to see how it affects value and marketability."

At the same time, a real estate agent can serve as a source of important information for homebuyers. In most U.S. states, selling (also called "listing") agents are expected to disclose facts about a home, such as its structural condition, that may influence its marketability. (Consider looking up the laws governing home sales and disclosures in your state.) If you buy directly from the owner (For Sale By Owner) — meaning no selling agent is involved — it could be a big risk, according to Sada. He wouldn't recommend taking the risk unless the asking price is at least 10% below what it would be through a real estate agent.

a man and a woman sit together on a couch in their new living room

Location is king, as expected. Does the home back up to commercial businesses or the interior of the neighborhood? The market's reaction to those variables is important, and these features can be desirable in one area while undesirable in another.

Size of home. Anything greater than the standard size of 1,500-1,800 square feet will add value, up to a point. As home size increases, however, the value per square foot decreases.

Number of bedrooms. A fourth bedroom adds a good amount of value while the value of adding a fifth, sixth or seventh decreases incrementally.

Number of bathrooms. Same goes for bathrooms: After two or two-and-a-half, the value of each added bathroom decreases. "The third bathroom won't add as much value as the second bathroom," says Sada.

Number of garages. There is a home-price jump from a one-car garage to two. However, there is not much value for anything above a three-car garage.

Quality of materials and upgrades. Custom cabinets, higher-quality countertops and high-end appliances will all add to the value of a home. So will a room's accessibility and functionality. How easy is it to navigate the kitchen, for example? What is the access like from refrigerator to stove to sink?

Convenience factors. Proximity to public transportation is important in urban areas; accessibility to conveniences like highways and shopping are a plus in the in suburbs. Features that inconvenience a homeowner will reduce value. Think: a kitchen on a second floor (common in modern two- or three-level condominiums) or entry through a garage or long hallway.

Regional variances. In some regions, it's the norm to have finished basements, attics or garages. These spaces aren't included in the livable square footage but can "affect marketability and add some contributory value," says Vestal. That's what Jennifer Whigham experienced when she purchased her three-bedroom end-unit town home in Coatesville, PA. "The home had a finished basement that was grandfathered into a pre-existing code," she says. "The result was that a homeowner wouldn't be able to finish another similar basement at the same cost." For Whigham, that finished basement added a lot of value.

Alaina Tweddale

is a Philadelphia, PA-based freelance writer who has bought and sold several homes. An appraisal report once saved her from a very expensive home buying mistake. She's eternally grateful.

The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.