Was doing an appraisal for a client yesterday, and as we must do, you have to analyze the “neighborhood”. Now in ‘appraisal speak’, neighborhood is not subdivision. It may not even be school district. Neighborhood in this purpose is something that has a definition that the appraiser must give to it. The tax records report give neighborhoods that consist of about 20,000 homes. Now the demographics are often given including racial make up, marital status, per capita income, per household income, and things that are not freely discussed by sales agents and rightly so. In order for fair housing laws to be practiced, these things are “behind closed doors”, but necessary for the work of appraising property.
While everyone wants, and thinks they need, an appraisal to come in as high as possible, the problem with that is that it becomes tax record. It is entered into the record for every refinance, and transaction that occurs on all properties. This is the basis for property taxes. This all is elementary I know.
Now if your property increases it’s value because the neighborhood improves around it, you may receive an appraisal from the tax man that is as much as $100,000 or more above the loan amount that you assumed when you took possession of the property. Now when you are paying annual taxes on a property of $1700.00 which is average in Cobb County, and it jumps to say $3,000.00, it is because the appraisals have all risen around you and you now have a home valued significantly more. Which stinks when you pay the taxes, and want to stay in the property for ever. It is great if you are wanting to cash in and find the next best thing.
Within our search and criteria on this property, there were 8 homes on the market within their criteria, but 417 had sold within the last year. This means that on the market there was not enough of their size home to fulfill one week of last year’s demand. Now this was during a time when many people are waiting to list their properties because spring is almost here. However, this is another influencer of how much a property appraises for. Less supply, will always bring more money, as long as their is that illusive demand. We have to look at what happened within the last year to determine future demand because the “real” future is just a guess. So this property will receive a premium evaluation due to the status of the current market.
These things can be explained to you through an appraisal process of most people’s largest investment, their home. Please contact us at the McElreath team for an appraisal on your own property. Whether you are selling, or reinvesting in your home, it is important to know what you are really starting from.
Contact us at Kirk@mcelreathteam.com.