Our budget for our new timber frame home was much the same as it would have been for a conventionally built home. We knew that we wanted to invest in materials and products that would make the home more sustainable, more energy efficient, and to perform better than many of the homes built today and in years past. This meant making tough decisions on what we could and couldn’t afford.
In the back of our minds, always, was the fact that this home had to meet some of the norms of the appraisal process. Just because we would have a timber frame, concrete countertops (a product often more expensive than granite), and Energy Star compliant appliances and fixtures didn’t mean that they would add that same value in the appraiser’s eye. Our energy efficient structural insulated panels will keep our utility bills in check, but again they may not add value when it comes time to appraise.
There is no line item on an appraisal report for “energy efficient” or “green” or “low maintenance”. While these items have an objective basis, they are still subjective when pulling numbers together.
Those of us who build, own, and/or live in timber frames understand the intrinsic value, but how to impart that value and how to put a dollar value on it is almost impossible.
I don’t envy appraisers today. They are held to high standards, yet every bank, homeowner, and real estate agent, has a model in their mind that may or may not fit with the actual numbers and calculations that an appraiser must use to reach his/her valuation.
Comparing local properties that have sold (particularly in today’s deflated housing market) can be tough. The number of properties sold within a fixed time (from six months to a year depending on the rules) and within a fixed area are often limited.
As you design and build your home, keep in mind that somewhere along the way it may need to appraise to comparable properties (unless you are building with cash) and make design and material decisions that will work for you, not against you.
We built a smaller than average home, but with higher than average finishes. In the appraisal process, the comparable homes were larger, so money was deducted due to the size of our home. The finishes were of higher quality and this helped us to recoup those deductions. We credit the workmanship and quality that was integrated into our new home in increasing it’s value in this unstable housing market.
That said, I’ll sign off for now.