Home improvements that impact appraisals

By Annie Schwemmer and Ann Robinson

For the Deseret News

Published: Friday, June 29 2012 4:17 p.m. MDT

Before: Although there were no structural changes to this room, new paint, trim, windows and furniture go a long way in changing the feel of the space.

Daniel Barton

One of our colleagues recently had her house appraised for an upcoming refinance. The historically low interest rates put her in the boat with several thousand other Americans also trying to take advantage of the opportunity.

The appraiser who came to assess the value of her house told a story of desperate homeowners scrambling to do home improvements to affect their homes' values. One man actually did $100,000 worth of landscaping in an effort to add that much onto the value of his house. Luckily, he was a professional landscaper and didn’t hire it out, but he was discouraged (to say the least) when he learned that landscaping doesn’t really affect an appraisal.

Appraisals are simply a comparison analysis of the housing market in a certain area. They determine the value of a house by looking at comparable houses that have sold recently. Sadly, foreclosures and short sales are included in this comparison.

Comparability is for the most part determined by square footage, bedroom/bathroom ratios and the year the house was built. Additional credit can be given for some upgrades. Structural upgrades like a new roof or energy-efficient improvements such as new windows are factored into the equation. Fresh paint, granite countertops and high-end kitchen cabinets can also affect the value for the better.

Trim, crown moldings and casings can add dollars to a house. A house with all the beautiful details added may see a higher value than a house of the same size with just the basics.

That is one of many reasons why Sarah Susanka’s remodeling theory to “build better, not bigger” is advantageous. Susanka’s “not so big” concept doesn’t necessarily mean living in small houses, just in houses with needed and comfortable space that is used every day. There are too many houses with wasted space that homeowners rarely see, let alone use.

Her theory involves reducing the literal size of a project by one-third but keeping the same budget. The money saved on square footage is then spent on added or upgraded fixtures and finishes to personalize a home, make it more beautiful and add character.

Susanka says making a house a home is more about quality than it is about quantity. It doesn’t matter how big a house is if it doesn’t function well.

Working within a smaller footprint, the design must be more creative and use subtle elements to make the most of the space. One space can comfortably serve multiple functions if it is designed properly and uses spatial concepts to distinguish it and add character.

Susanka says one of the most regrettable trends in home design over the past few decades has been the decrease in the size of trim moldings used around windows and doors. The more substantial the exterior and interior trim, the more dramatic the finished look, feel and personality of the home will be.

But banks, real estate agents and appraisers are fixated on square footage and generally do not seem to subscribe to the "not so big" philosophy. Appraisals are somewhat subjective in that the opinion of the appraiser is what counts in the end. While attention to detail will certainly have an impact on a home’s style, there is no guarantee that it will translate into actual dollars when the home is sold or refinanced.

Even though upgrades may affect the appraisal value, an appraiser who walked through our friend’s house said she hates to see people doing 11th-hour upgrades in an effort to impact a house’s value.

“Do any updates for you, not for the value,” she said. “Do a remodel because it will make you happy. You are the one living here. Ultimately, the house that sold down the street is the biggest thing to impact your home’s value. I always tell people to remodel for you first and the value second. Values change, but you have to live in your house every day.”

We agree. There is wisdom in that.

Architects Ann Robinson and Annie V. Schwemmer are the co-founders of Renovation Design Group, an architectural firm specializing in home remodels. Send comments or questions to ask@renovationdesigngroup.com.

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