Valuation and Evaluation

Valuation

Properties listed for sale typically have a price per square foot.  Dividing the asking price by the heated and cooled square footage will yield a price per square foot.  However, multiplying the heated and cooled square footage by the price per square foot will yield the asking price.  So, what are the true ingredients or recipe for price per square foot?

Before purchasing any home or property, an inspection performed by a licensed professional is a given and goes without saying.  However, it is the property appraisal that provides an industry or market valuation for the property in question.  Property appraisers likely use a matrix, grid or checklist of details to determine and assess what a property is worth.

County property appraisers or tax assessors also estimate property values but only from afar, as they do not tour the inside of a property.  They do, however, track neighboring sales and perform comparables or comps.  In the state of Florida, each year, a Truth in Millage (TRIM) notice is sent to property owners.  On each TRIM notice is a Just or Market Value along with an explanation.        

Billions are spent on advertising and marketing.  Why?  Our eyes and certainly our attention span.  Food commercials are notorious for using size and color to enhance and appeal to our senses.  What does this have to do with a home search?  Everything.   House flipping is quite popular and can be lucrative, depending on the project, team and circumstances.  A fifty or sixty year old house that’s been painted and cosmetically modified is still a fifty or sixty year old house.  Some foods look delicious but taste terrible.  A home that has been renovated in appearance or updated cosmetically may look attractive but be in need of serious repair.

Did you know there is a difference between a slate roof and a concrete roof?  Of course.  Did you know there is a difference between a clay roof and a concrete roof?  Sometimes, a listing description may say “tile roof”.  Is the tile clay or is it concrete?  What’s the difference? 

How about a wood deck vs composite?  Vinyl siding vs Hardie plank or composite?  Do you like the wood flooring?  Is it wood at all?  Perhaps it’s a wood-look tile? In one room there may be an engineered wood floor and in another room reclaimed wood.  There’s vinyl plank and vinyl tile. 

There are trends, popularity and fads.  Wood flooring, for example, could be hand scraped, engineered, solid, maple, oak, walnut or bamboo.  Why not ask? Were the floors refinished or maybe even oiled? A solid wood floor may be ¾ inches thick where an engineered floor may have only a solid ¼ inch thick top wear layer with plywood sub-straights.  Again, why not ask?    

There are many products, manufactured in many places.  Why not ask pointed or specific questions and then do your own research?

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A property appraiser’s role is to assess the value of a property, while a tax assessor’s role is to determine the value of properties for taxation purposes.

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Tax assessor offices are called property appraiser offices because they establish (or assess) the value of properties for tax purposes.

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In some states, the office that determines property value is called the property appraiser’s office.  In other states, the office that establishes property value is called the tax assessor’s office.

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Evaluation

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Most employers provide employees with a periodic performance evaluation. Perhaps annually.  The purpose of the evaluation is to assess, measure and discuss an employee's performance.  How well the employee has performed according to company or department requirements and expectations.

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Interestingly, Fannie Mae, Freddie Mac and other GSEs (Government-Sponsored Enterprises) are working to redesign the Uniform Residential Appraisal Report (URAR) and Uniform Appraisal Dataset (UAD) as part of the Uniform Mortgage Data Program (UMDP).  The GSEs are doing this to improve data quality and standardization at the request of the Federal Housing Finance Agency (FHFA).

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Sort of like an update or revision to a company's employee evaluation form.

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Three houses in the same neighborhood or community, designed and constructed by the same architect and builder during the same year could yield very different results.  What do we mean?  Imagine a development consisting of homes built 20 years ago.  One home (A) is well maintained, another home (B) is severely neglected over the years, while a third home (C) is not only well maintained but also tastefully updated with modern improvements and amenities.

As a result, one home could sell for very little while another home sells for much more.  However, it really depends on the buyers, sellers and real estate agents involved.  There are also additional factors such as timing, circumstances and market conditions. 

Think of the property “valuation” or worth as the appraisal and tax assessment.  The “evaluation” or condition would involve the inspection and seller’s property disclosure.