Home Valuation tips for First Time Home Buyers
Determining a homes value is not always as easy as it seems. While your real estate agent and ultimately, a real estate appraiser will determine the true value of the house you are buying, it’s a good idea for the first time home buyer to have some basic understanding of how home valuation works.
Your Real Estate Agent should be able to give you sales in the areas you are interested in. In addition to sales you should be looking at active sales. Your Real Estate Agent can supply you with active sales in addition there are several websites that show sales for the area. You can also access MLS listings in your area on line through a number of free real estate websites
Please Note:
Comparing sales and active listings to homes you are interested in you need to make sure you understand what is comparable. What meets FNMA guidelines in comparing properties.
If homes in your area have basements, make sure you compare the living space (above grade finished square feet) to living space and basement (below grade finished square feet) to basement. Other words you can’t consider rooms and finished square feet in the basement and compare them to rooms and finished square feet in the living space. They must be separated and compared accordingly.
FNMA requirements for split foyers/split levels state that the “lower level”, regardless of its percentage of finish or percentage of area above grade, unless it is 100% above grade, be considered as “finished basement” and only the area fully above grade be considered finished living area.
When dealing with finished expansion areas you need to consider ease of entry and to make sure the ceiling height meets local codes and/or FNMA guidelines. Also the area must be finished similar to the main level. (Check local codes)
When dealing with bedrooms – the bedroom must have a closet and it needs to be separate from other rooms by closing a door or doors. It can’t be a room that is used to get to another room or bedroom, etc.
These are some of the most common misconceptions about homes. These and other factors affect value of the home.
Other factors that need to be considered and may or may not affect value. Scenic views, corner lots, busy streets, function utility, etc.
If you need more help on these matters please leave a comment or email us at firsthomeguy@gmail.com
First Home Guy 
July 25, 2009 at 10:32 pm
This was good info for me as I live in a walk-out split level with the lower level completely finished and I wasn’t sure how many square feet my house was classified as.
July 25, 2009 at 10:43 pm
Hi first home guy I am an appraiser. The fact that it is a walkout does not mean that it can be considered in the gross living area. Regardless of the finish, unless the lower level is 100% above grade it can’t be considered in the gross living space. It would be considered finished basement area and appraised as such.