Improvements in Real Estate Appraisal

Instructor: Traci Cull
Property appraisals contain detailed and accurate descriptions of the property and its improvements and should be very specific with supporting information if necessary. This lesson will discuss the purpose and key terms related to improvements.

Noting Improvements

Say Janice is wanting to sell her house and has hired Joe to do her appraisal. She knows that she has made many recent improvements to her property and is not sure that Joe will be able to visibly see all of them. She makes a list of all them ahead of time and gives them to Joe.

Joe goes to visit Janice's house and begins his appraisal. He does his normal inspection and writes down all pertinent information. He happens to see on Janice's list that there were some improvements he didn't know were recent and didn't notice as improvements per se.

He notices right away that her main bathroom and kitchen on the first floor are recently remodeled. She states that she had them done two years ago. This will need to be described in detail in the improvements section of the appraisal and will affect the overall value of the home. He knows that most kitchen and bath updates will need to be included if they occurred in the last fifteen years.

Appraisers Duties on Improvements

Appraisers are required to describe all improvements on a piece of property. The level of description will vary based on the extent of the improvement, but should include things like present use, type and quality of construction, age, condition, size, number of rooms, fixtures and equipment.

Improvements are market-based and do not always go by how much it cost to complete them. The current market will show what people are willing to pay for such upgrades and this will vary from state to state.

Appraisers like Joe are very interested in any property improvements and their quality. However, appraisers are not perfect and will also rely on the agent and owner to point out all recent changes to the property. This will help ensure that nothing is left out.


If a property contains an over-improvement, this would need to be addressed. This is something that is done in excess of any need and may not actually be the best use of the property.

For example, say the average home in a neighborhood is 2000 square feet and a particular property is 4000. The appraiser must address this over-improvement and indicate any contributory value it has on the property. An over-improvement to a property does not automatically make it a negative aspect, but it can, especially if it unusual for the area.

A property that is 'out-of-character' for the neighborhood, way larger than other homes in the neighborhood, below quality for the neighborhood, or any other noticeable difference, will need to be fully explained in the improvements section of the appraisal.

Energy Saving Improvements

Certain energy-saving items must be clearly detailed in the appraisal report. These characteristics will help determine the marketable value of a property based on where it is located. Energy saving improvements could include certain energy-efficient ratings or certifications, solar systems, programmable thermostats, tank-less water heaters, and insulated duct-work.

These energy-efficient characteristics would be compared during the sales comparison valuation of the property. Joe notices that Janice has a tank-less water heater and a solar unit on her roof. Both are energy-saving items that should be fully described in the appraisal.

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