My neighbor's house sold for $650K but you appraised mine for $575K, what's up?

There are a lot of factors involved when a residential real estate appraiser estimates the value of a property. Appraised values are determined primarily by physical similarities and differences between your home and comparable properties, as well as existing market factors. Examples of physical differences may include such items as: gross living area (GLA); overall condition; site or lot size; age; bedroom and bathroom count; garage and carport count; location; view; and other items such as the presence of in-ground swimming pools; central air conditioning; accessory units; fireplace count; and, other amenities. Examples of market differences may include how long ago a comparable sold; in what direction are values trending; buyer and seller motivation; and, what form of payment did a buyer use, cash or a loan?

Each of the above examples, and others, can necessitate an appraiser to make minor to major adjustments of comparable properties, relative to your home. A house right next door to yours may sell for more or less than yours is appraised for and the value difference could be based on any number of the above factors. Therefore, your home could be valued significantly less, or more, than the house right next door.

In our next post, we will discuss some of the above examples of physical and market differences and how exactly they may affect the appraised value of a residential real estate property.