What Is Your Appraiser Thinking? Here’s What


How do you price a big white box?

That is what Sharon Bagby is thinking as she walks around a five-year-old house in a small subdivision at the edge of a cornfield northeast of Chicago.  The farmhouse is white inside and out: white siding, white interior walls, beige carpet, cream-colored vinyl flooring in the kitchen and bathrooms. A small brass Colonial-style chandelier hangs from the coffered dining room ceiling. The window blinds are white. It’s as generic as generic can be.

And isn’t that a selling point? After all, home magazines and television shows overflow with advice about neutral decorating.

But in the eye of a seasoned appraiser, there’s neutral decorating…and then there’s ‘builder white.’ “It’s all as the builder specified – and that’s not common,” she notes, especially in an era of upgrades and just-like-the-catalog decorating.

Bagby has been appraising homes for two decades. When she looks at a house, she sees not a home, but a marketable commodity. Exactly how marketable is in the details that she is paid to discover.

A good appraiser will look up the tax records for the house and research the neighborhood before driving out to see it. Such records provide clues about the age, likely condition, and value of the location. Bagby drives around the neighborhood to see if the house is situated in a quiet section (desirable) or if it is adjacent to a busy – and noisy – school or street.

On this day, Bagby is reviewing the market value of house built for an elderly couple by their daughter. The couple have both died and disposition of the estate requires that the property be assessed so that the will can be executed.

The house is silent, its rooms occupied by well-worn chairs, sofas and beds, and a few half-filled boxes. Once Bagby finishes the appraisal, it will be cleaned out and put on the market. It’s likely that the family will set the price based on her opinion.

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“I look for what will not surprise a genuine buyer,” says Bagby. In other words, judging from its location and the first impression from the outside, does this house meet the expectations of a well-informed buyer?
It’s a winner on one important point: it’s big and has lots of storage space. Though plain and generic, it has several well-located, fully equipped bathrooms. Its closets are generous.  Even a big family would have plenty of room in this house, with its four bedrooms, second-floor loft, and ready-to-finish basement.

“Functional obsolescence” is appraiser-speak for elements that just don’t work for today’s homeowners. Most homeowners expect at least two full bathrooms; a three-bedroom, one-bath house is simply not what buyers expect (or want).  Even if such a house was fairly large, its single bathroom would undermine its market value.  A kitchen that lacked a dishwasher; a one-car garage; operating but ancient appliances; and bathrooms with tubs but not showers  are all examples of functional obsolescence.

It’s big and functionally current, but this house is plain. Bagby notes that windows lack wood molding. Vinyl, not ceramic tile, finishes the kitchen floor. Builder-grade oak kitchen cabinets lack knobs.  Kitchen appliances were installed new when the house was built, but are lower-end ‘white goods.’  The counters are laminate.

The plain-Jane interior is out of synch with the neighborhood. Bagby says that other houses in this subdivision have upgraded cabinets, ceramic tile floors, and stainless appliances. Many have granite counters. “Typically in this price range I’m expecting a solid surface counter,” she says.

She is underwhelmed by the kitchen, even though it does have a good-sized pantry and a breakfast area that faces sliding doors to a concrete-slab patio. She had expected additional built-ins, a fancier island and upgraded counters for a 3,100-square-foot house in a middle-class subdivision.

As she sketches the floorplan of the house, takes photos and measures rooms, Bagby develops a mental image of the type of buyer who would be attracted to an online description of this house – and what that buyer is willing to pay for. “You have to think, what is important to this buyer?” she says. A house of this size is unlikely to be affordable for a first-time buyer. But a buyer seeking to trade up will not only want more space, but also nicer finishes.

Her verdict: Though this house is bigger than its neighbors by several hundred square feet, it isn’t worth more, because a buyer will expect to install nicer finishes.

Bagby gathers her notes, camera  and sketches. It has taken her two hours to examine the house from basement to crawl space. In a couple of days, after some additional research, she will send her appraisal to the waiting family. But by then, she will already be channeling the expectations of buyers for another house.