Real Estate Is Not An Exact Science…Not Even Close!
The truth is that there are many variables involved and I’m not just talking about physical variables like granite counter tops and travertine floors. I’m talking about other aspects like the motivations and the desires of both sellers and buyers. It can be very difficult to account for more value or less value when you bring the human element into the mix. Sure, it’s easy to pull up data for value trends in a certain area, but you have to blend that data with variables that are present in each situation.
Working as a realtor in Orlando since 2004, I realized long ago that real estate is about people and every person is different with different needs and different motivations. Orlando home values can differ drastically depending on who you’re talking to.
These days most home buyers know exactly what they want. What may be considered valuable to one person may be viewed as a negative to another. Does the home provide a specific need for the new buyer? A perfect example of this can be a home with a pool. Living in Orlando especially, I personally place tremendous value on having a pool in the backyard so that my family and I can cool off on those hot summer days.
However, there are people who prefer to not have a pool. Having a pool to them could represent having more things to maintain and more expense or maybe they have small children who can’t swim. To these people, having a pool is a huge negative and they may not want to even consider looking at a home with a pool.
Other examples that can influence buyers with a specific need may include having an in-law suite, one story or two story floor plans, master on the main floor, handicapped friendly floor plan, etc. Some may place the quality of the construction and the design of a home at the top of the list.
Elements outside of the home itself like living in a certain school district, being close to public transportation or having a pond view can also increase or decrease the appeal of a home depending on what the homeowner is looking for.
People will always be willing to pay more for what they perceive to be valuable to them in their lifestyle.A Home’s Value has to be measured two different ways: On paper – what the data says and, how well it will serve the buyer and their needs.
Appraisal Value Is The Only Thing That Matters To Lenders
I’ve seen single family homes in Orlando with bowling alleys, batting cages and even basketball courts…indoors! However, while a house may contain all these luxurious features, the problem is that these items are considered to be over improvements and just don’t add any “dollars and cents” value to the home.
Although a buyer or a seller may place more value on a home for personal preferences, the lenders are only interested in what the appraised value is. Attempting to challenge an appraisal in these situations is close to impossible. Underwriters typically do not like to think outside of the box.