How Much Value Do Appraisers Add For Views?

Any adjustment an appraiser utilizes in an appraisal report should be based on market reaction.

The adjustment could be a quantitative adjustment (i.e.: matched paired analysis indicates an X% premium for a particular type of view) or qualitative adjustment (i.e.: potential buyers prefer a particular view; that opinion has been developed through discussion with market participants and the appraiser's experience in the subject market and therefore the appraiser has reconciled the appraised value towards the higher end of the range of values indicated by the comparables utilized).

Ideally, the adjustment should be demonstrated in the appraisal by utilizing at least one comparable sale which has a similar view as the subject property.  If all sales have similar views, then no adjustment would be required.

Wow Jeff, gorgeous photo and yes we think there should be value added for view.

Well, we've never had an appraiser add value to the home's value for the view, but we have had the good fortune to have the view be the deciding factor in getting a home sold! They probably would have bought it anyway, but they said the view was the icing on the cake.

Tangible vs intangible....while a view may be an asset in overall appeal and hooking a buyer, can that "added value" be demonstrated through paired sales analysis? Jesse is on target; even if we can't say it adds X, we can recognize the contributory value when we reconcile the data and assign an appraised value.

In Atlanta, this debate rages especially with condos, floor height and "views". Candidly speaking as an appraiser and broker, there are very few instances where there is DEMONSTRATED and CONSISTENT difference in price due to either. Ground floor or other lower units directly impacted by building activity are a different story, but is there a genuine difference between the 8th floor and 12th floor? And to be clear, we're not talking about a view of the side of a building or wall - Atlanta isn't NYC or a major metropolis; by view I mean distant views.

Remember - the one constant about real estate is that there are no constants - every situation is unique.

Jeff, your photo is absolutely stunning! Beauty and views are definitely in the eyes of the beholder, whether s/he is an appraiser or a buyer.

Views are not an intangible value. They actually amount to dollars, sometimes in a big way if they are fairly rare within a community. Unobstructed lake or ocean views can add as much as $ 50,000 to a home's price in Southern California. And if your home is one of only a dozen, there will be a waiting list of people willing to pay it.

Views matter but I've found it subjective to 'everyone'. One appraiser & I once got into a heated arguement over how much for a view.  Each persons ideal number is different.

This looks more like a painting than a photograph. Great pic and very inviting.

It depends on the view, doesn't it? I looked a house with an ocean view, a 7k sf lot with a 2BR 1 BA 1100 sf house 50 years old with an asking price of $596k. The view was on sale, not the house. it was a tear down, so it does happen from time to time. I simply walked away without comment. 

Just to be clear, I (and probably many appraisers) recognize that a "view" will add something to a property vs one without one. As I said, most will be drawn to that, it's common sense. The "however" is when it comes to placing a "number" on it.

Appraisers don't set value, the market does. Appraisers are expected to work within the very tight underwriting guidelines currently in place - and often that means being able to support adjustments with data. Granted, a buyer may fall in love with a "view" but that present problems for appraisers if that love is blind and unsupported. Just because buyer A pays for it doesn't mean buyer B will or worse yet, it will be recovered if foreclosed upon.

Call it appraisers killing deals or whatever, but the bottom line is that appraisers are now expected to validate everything with data or face the music if/when things go wrong. Would you put your kiester on the line without supporting data knowing that if the loan goes bad in a few years that your phone will ring with notice of a lawsuit?

If there's tangible support that is applicable in an appraisal, it's recognized. If everything is based on opinions and "should add" well then there might be a problem. As I mentioned, there's latitude in reconciliation but the idea that you're going to assign a definite added value without proper paired sales analysis is typical agent nonsense. A buyer may be willing to pay for it but if an appraisal is required there has to be tangible, credible support. That buyer may place X value on it - and that's fine - but the next one might not. 

#20 Hank -

Very good explanation from the Appraiser's viewpoint. Some factors that we Agents need to keep in mind. Thank you!

Gorgeous view and should be factored in as part of the desirability of the lot!   A waterfront property is worth substantially more if it has a wide water view plus deep water.   On the Eastern Shore of Maryland (across the Bay Bridge close to Annapolis and DC), most of my buyers this year are seeking a four bedroom house with a wide view and deep water and a pool.   I could sell many more properties if I could move some houses to get the desired wide view!

I love the photo in your post.  Great information.

Views are worth money. Our county assesor adds to the value if there is a view.

Jeff, I think the answer is really subjective and decided on a case-by-case basis. For the most part, I think the price tag for a view is more "accurate" from the buyer's point of view, instead of the appraiser. :)

Leilani

Wow - great photo!  Yes, views can add value, depending on who is looking.  The market will paint that picture for sure.  Great way to sell a neighborhood!

I think I would rather have that view than any of Washington DC.  I am sure you will find buyers with a view like that.