The price that was paid for a property isn’t a number that is used to determine the current value. Home improvements may add value to a home but the value does not go up a dollar for every dollar spent.
The value of real estate is determined by location, size, and condition. An appraiser determines the value by looking at three comparable properties that are close by, and similar to the subject property.
Ideally, the comparable properties have been sold in the last year and are similar in size and located nearby.
Since no two properties are exactly the same the appraiser makes adjustments. Adjustments are made for differences in the number of bathrooms, bedrooms, fireplaces, garage stalls and any other difference in the properties.
The overall condition of a property is important. Even landscaping and curb appeal counts.
A three-bedroom rambler with 1200 finished square feet of livable space that is in great condition with updated kitchen and baths can be worth twice as much in one St. Paul neighborhood than it is in another and won’t have the same value in Maplewood that it has in Mendota Heights.
Also see Because mine has bigger nails and When do I need to get an appraisal?
