Appraised Value: The Ups and Downs Of How Much A House Is Worth

Determining the Fair Market Value is an ever ongoing struggle, and major balancing act. That’s because buyers want a house to appraise on the low side — to keep the purchase price down. While sellers want the same house to appraise on the high side — to make the sale price higher. And then you’ve got the owners of the house — who also want the appraisal to be on the low side, in order to keep property taxes down.

So with all these different agendas and points of view, how is the fair market value of real estate property actually determined?

Once a year, your county sends all area homeowners official notices that puts a dollar value on their property, and property taxes are then based on those dollar values. However, before those notices get sent out, a long, detailed process usually takes place. First, the land is valued as if it’s vacant — an empty lot, in other words. Then any improvements are described and measured. Improvements consist of the house and any other structures, pools, sheds, garages, and so forth. Next, most counties check the Marshall Valuation Service Cost Guide. It’s a standardized nationwide guide for determining the value of the cost per square foot to build a building that fits the description of the improved property. Next, if the house isn’t brand new, the replacement cost is considered, as well as depreciation; the year the house was constructed and the condition of the property are factors here. Appraisers then must take the critical step of comparing the value of the house with recent selling prices of similar homes in the neighborhood. At this point, the appraisal might stand “as is” — or it might be adjusted upward or downward.

Market Value is a theory, in other words — not an unchanging fact.

In a perfect world, you have to have a willing buyer and a willing seller. Neither being under duress. Both are in a position to maximize gain and are trying to do this. But in the real world, things are rarely that simple and equally balanced. Which is why people feel differently about the appraisal value of a house. It really depends how strong their position is as a buyer or seller.

Does the local economy come into it at all? You bet it does.

Ask any successful REALTOR® about that! He or she will tell you they’ve noticed that the growing economy is attracting people from other areas who consider real estate in San Antonio a bargain. That helps fuel an increase in property values.

How about your school district, the look of other houses near you, and walk ability? Yes to all. Understand all of your homes features and benefits, then make sure you let buyers know about them as well.

Now you know where that Grand Total comes from.

You’re now armed with some basic information that can hopefully help you make a better house buying decision. For instance, you should now understand how two virtually identical houses that are in two different neighborhoods could be so very far apart in price and appraised value. And why your choice of the right house in the right neighborhood could be worth a not-so-small fortune to you right now — and years down the road.

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