The fair market value of real estate is the selling price an informed and unpressured buyer would pay to an equally knowledgeable and unpressured seller. This number is constantly changing due to market conditions. When you order a home appraisal, it’s only natural to wonder how your appraiser came up with that magic number they call “fair market value.”

Steve Parker at Classic Maui Properties wants to help you understand the process, so below, he explains how he determines the value of a home in Kula, Hawaii. There are a few vital factors your appraiser considers to give you a fair price for your real estate sale:

• Similar Recent Sales: These are known in the industry as “comparables” or “comps” and are the core of any appraisal. Comparables are homes sold within five miles or so of your home that are closely related to yours in square footage, the number of bedrooms and bathrooms, similar yard size, etc. While comps should be less than 90 days old, if this isn’t possible, appraisers will look through the past six months or so. Based on these comparables, the appraiser has a starting point to begin factoring the value of your home. Because no two properties are identical, they use complex formulas to adjust your resulting home value based on square footage and upgrades.
• The Condition of the Home: They will analyze the condition of the home from the roof down to the foundation. Every home ages differently and needs to be individually inspected. For example, a rental property will often have more wear than an owner-occupied home, because renters don’t give the same level of care as owners will. Issues like a roof that needs replacing, water damage in the bathroom, or a crack in the foundation will decrease the value of the home.
• Location of the Property: Have you ever heard the phrase, “Location, location, location?” The quality of your neighborhood is important here. Buyers tend to appreciate privacy, so a property with neighbors at a distance or situated away from road noise will rank higher than those that don’t. The curb appeal of your neighbors’ homes and quality of local parks or schools also impact this factor.

Experience matters when it comes to a real estate appraisal. What’s also important is the ability a person has to provide you with an accurate, unbiased property value. Appraising properties since 1970, Classic Maui Properties is the most trusted source on the islands and they can be reached at (808) 878-1001 to schedule your appraisal. You can also acquire more information about their process online.