A letter from an experienced Vermont
appraiser crossed my desk last month. He wanted to know how Craftsman’s appraisal
tools handle several trends in residential construction. Good question.
Energy-Conscious Design
This VT appraiser asked how Craftsman
adjusts costs for homes with superior energy packages. In his experience, homes
built to minimize heating and cooling loads cost from 5% to 15% more than conventional
homes. I won’t commit to those numbers. But I agree that homes built today offer
buyers more opportunities for energy-saving upgrades. Case in point: Last May,
Maryland started requiring builders to tell their clients about tax credits for
energy-efficient options. (Maryland Business Regulation Code § 4.5-603.)
Still, evolving energy standards are
nothing new. Home builders have been on an energy-conservation binge since at least
the oil shock of 1973. Craftsman published the Minimum Energy Dwelling in 1977. Since then, residential energy standards
have improved every year. What was cutting edge design ten or twenty years ago is
the bare minimum now. Our frame of reference has changed.
My recommendation: evaluate energy-efficient
design the same way you would appraise better quality anywhere in a home. Craftsman’s
appraisal tools offer six quality choices, from Minimum to Luxury, for each of the
dozen major parts of a home, from foundation to roofing. When you see built-in energy
savings, boost the quality rating on that part of the home. I’ll be surprised if
the increase doesn’t fall in the 5% to 15% range.
One possible exception: A PV solar array
can add six figures to the cost of a home. But I wouldn’t routinely add the cost
of installed solar to any home appraisal. Think of a solar home as you would of
a home with a Ferrari parked in the garage. It doesn’t change the home value. The
same with solar. The PV array on the roof is probably leased from a solar investment
company. Most solar energy systems can be uninstalled and relocated elsewhere. And
the useful life expectancy of solar add-ons is much less than the life expectancy
of the home itself. That puts PV solar in the class of an above-ground pool, not
a fixture that belongs in your appraisal.
Super-Luxury Homes
Every appraiser needs to know about these.
Thirty years ago, nearly all homes were built like homes, not like five-star hotels.
Now, every state has communities with super-luxury homes:
- Over
3,500 square feet of floor with a massive front entrance,
- Marble,
quartz and glass everywhere,
- Over
100 built-in light fixtures,
- Cavernous
rooms, 18-foot ceilings, no square wall corners,
- More
bathrooms than bedrooms,
- Kitchen
built-ins appropriate for the kitchen in a high-class restaurant.
These are homes intended to break the
norms of residential construction.
That’s why Craftsman appraisal tools
step up the game when a super-luxury home is detected. For example, try NationalAppraisal Estimator. Enter a floor area of over 3,500 SF, more than 10 building
corners and luxury or semi-luxury class for each of the 10 quality categories. That
elevates your appraisal to the super class. You’ll be counting building masses,
not building corners. Your cost breakdown for that super-luxury home will be a step
above conventional residential construction. Cost totals for finishes, design and
engineering will be a much higher proportion of the construction cost.
If your focus is replacement cost rather
than appraisal, have a look at Insurance Replacement Estimator.
Like all Craftsman valuation tools, it’s backed by over 60 years of construction
cost estimating experience.
