When buying or selling a home it can be difficult to navigate
and pinpoint exactly what is included in your square footage. Most people would count attics and basements but that is not always the case. It is very dependent on how the home has been kept up and what upgrades have been done over the years. This means that
two similar homes in the same neighborhood could have two incredibly different square footage.
So what are the requirements to
be counted as square footage? The space needs to have flooring, wallcovering, ceiling and the ability to be lived in 365 days a year. The last one is typically where things get a bit more confusing. This means that it needs to have windows and heat capability.
The confusing thing is that staircases, pantries and closets can be counted as square footage - even though you can’t technically live in them.
So when would a basement or attic
become true square footage? The easy answer is that it has to meet the requirements on square footage. The more technical answer is that it is all based off of where you live and what your state decides to count as square footage. Attics must also need to
be accessible by a conventional stairway.
This also brings up the questions
about whether or not a bedroom in the basement can be considered an actual bedroom when you pull up information on the home. Just because you can count your basement in the square footage (if your state guidelines allow) does not mean you automatically get
to add in a basement bedroom. There will be requirements by state/city - like windows or being a walk in type basement - that would then allow you to count it as an extra room.
While your real estate agent should
be up to date on what counts as square footage and what doesn’t it never hurts to do your own research. Different areas can have different guidelines and you want to be as knowledgeable as possible. This will help you understand the different valuations of
your home and allow you to ask the right questions.
Appraised value is an evaluation of a property’s value based on a given
point of time. It is the value that the interested buyers bank or mortgage company places on the property.
Assessed value determines the value of a residence for tax purposes and
takes comparable home sales and inspections into consideration. It is the price placed on a home by the corresponding government municipality to calculate property taxes. Your assessed value will typically be less than the market value because they are only
looking at a certain amount to tax you on (typically 80 - 90% of what your market value would be).
Market value is the most probable price that property should bring in a
competitive and open market under all conditions requisite to a fair sale. In plain english it is the price that a buyer is willing to pay for a home, and a seller is willing to accept.
As home buyers/owners and sellers
it is important to know how these all fit into the value of your home. The lower end of the valuation should typically be the assessed value since it is only a percentage of what the home is worth. The appraised value may come in a little higher or lower than
the market value but the final say on the value of your home is almost always the market value. It will more than likely end up being your purchase/selling price at the end of the day. These numbers will all come together to give you a fair price and allow
you to feel comfortable in what you are selling/purchasing.
Question: How do appraisers account for a difference in year built? Do appraisers give an adjustment when to comps there is an age difference?
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