As an appraiser, you’re not always dealing with straightforward, cookie-cutter houses. Many properties have certain features that make your job a little (or a lot) harder than usual. We recently asked our appraisal community, “What specific home feature is the MOST challenging to appraise, in your opinion?” The results are in. Here are the top three home features that make for a challenging appraisal.
What specific home feature is the MOST challenging to appraise?
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1. Solar panels and “green” features (37%)
“Solar panels and green features are still new in my market and require more attention to the details of the benefit these items provide to the homeowner and how they impact the subject’s marketability.”
“There are so very few homes with solar panels in our markets. The limited data makes it very difficult to find enough data to determine the market reaction.”
“In my market area, homes with solar panels are definitely a challenge because the replacement cost far exceeds the contributory value in the market.”
“First you must determine if they are owned outright or leased and then determine the impact on value. It is difficult to find sales enough to perform a paired sales analysis. Also since these are relatively new features the long-term effect is unknown.”
For helpful info on this topic, check out our articles: FAQs About Appraising Solar Panels and FAQs About Appraising High Performance Homes.
2. Accessory dwelling units (23%)
“Due to appraising rural properties, there is just a large variety of accessory dwelling units. It is extremely difficult to determine the value added for those units. They are usually accompanied with additional value-adding improvements as well.”
“Sales data of properties with more than one dwelling are few and far between. This makes appraising the property using the sales approach difficult and complex. The cost approach is typically unreliable because most secondary users will not pay full price for the second unit. This means in order to figure out the obsolescence you may need to rely on sales of homes that are not similar to the subject but have two dwellings, or use an expert’s opinion based on experience.”
“First off, ADUs are hard to find in my area, but they are getting more and more popular. Second, I feel like the added value is all over the board, especially in scenarios where it is a detached garage conversion or a basement. Also, then you have to address quality, condition, is it permitted, does zoning allow it, and so on and so forth. I have yet to find a similar ADU to what I am appraising at that moment.”
For related info, read our article: How to Identify a Single-Family with ADU vs. Two-Family Property.
3. A premium view (16%)
“The most difficult homes to appraise that I come across are homes with views that can’t be replicated by another lot or home in the area.”
“A premium view can be priceless, so not sure how to put a price on that part.”
Other challenging home features
In addition to the top three challenging house features outlined above, some appraisers selected finished basements and attics (6%), extensive landscaping (5%), and home additions and garage conversions (3%) as the most difficult features to appraise.
The remaining 10% of survey respondents named “other” challenging home features, including:
- Pools
- Mobile and manufactured housing
- Transitional vacant land
- Oddball properties (pole buildings, converted schools, geodesic domes)
- Indoor basketball courts
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