What Lowers a Home's Value the Most in Scottsdale?

What lowers a home's value the most in Scottsdale is usually stuff paint can't fix: a tired roof, a noisy street, an HOA bill or a limit on the land. Worn-out major systems, what sits next to the lot, special or unpaid HOA assessments, recorded limits on what you can build, work done without a permit, a leased solar system and problems nobody wrote down all pull a price down, and several of them are things an appraiser has to comment on. Fannie Mae's Selling Guide says appraisers have to base adjustments on how the market reacted, so what any of it costs you depends on what buyers near you have paid.

I'm Jen Keene, a REALTOR® with eXp Luxury in Scottsdale, AZ, and I'm the agent people call at every stage of their life. When I price a home, these are the things I look for first, because they decide which sales I compare it to. This post is about the conditions that are hard or slow to change. If you're deciding which repairs to make before you list, here's my post on what to fix before selling a home in Scottsdale.

An appraiser starts with recent sales of similar homes and adjusts each sale up or down for the ways it differs from yours. Fannie Mae's Selling Guide, section B4-1.3-09, says the appraiser's adjustments must reflect the market's reaction, and that an underwriter checks whether the opinion of value is adequately supported.

Because the amount comes from sales, there isn't a set dollar figure for a busy road or an old roof, and the same issue can mean more on one street than another. That's also why I don't quote a percentage for any of the items below. For your own home, a licensed appraiser or a comparative market analysis built from the sales near you is the way to get a number.

Appraisers grade a home from C1 to C6, and the roof matters. Fannie Mae and Freddie Mac's own examples, in the Condition and Quality Rating Definitions they publish together, put a badly worn roof, even one that isn't leaking, at C5. In Fannie Mae's Selling Guide, section B4-1.3-06, C4 is some minor deferred maintenance and wear from normal use, and C6 is damage or deferred maintenance severe enough to affect safety, soundness or structural integrity.

The rating matters because of financing. The same section says that when an appraiser finds physical deficiencies that could affect safety, soundness or structural integrity, the home is appraised subject to the repairs being done, and a loan on a C6 home can't be sold to Fannie Mae until it's brought up to at least C5. If the lender needs that fixed before closing, it becomes part of the negotiation. If your roof, air conditioning or electrical is near the end of its life, a buyer's inspector is going to find it, so it helps to know first.

They can, and they're the hardest kind to change, because they're about what's around the lot. Fannie Mae's Selling Guide, section B4-1.3-04, says the appraiser must consider the present or anticipated use of any adjoining property that may adversely affect the home's value or marketability. The same section says that if a home fronts on a street that isn't typical for the community, the appraiser has to address how that affects value and marketability, and that the appraiser must comment if there's market resistance to a property because of its site.

For aircraft, the Arizona Department of Real Estate posts public airport boundary and disclosure maps on its website. Power lines, a large wash, a commercial building next door and a steep driveway can all raise the same question, and the appraiser looks at how buyers near you reacted.

If you're buying, look up the address on those maps and drive past at the busy times of day before your inspection period ends. If you're selling, I price it from sales of homes with a similar setting so the number starts out realistic.

Arizona law makes the HOA put its assessments, liens, open violations and lawsuits in writing for the buyer (A.R.S. 33-1806). That includes any special assessment the board approved but hasn't assessed yet and any submitted for member approval within the previous four months. Ask for that statement before you list, so nothing in it surprises you or your buyer.

A large special assessment or a lawsuit is something a buyer weighs against the price, and an open violation is something to ask the association about before you list. My post on HOA rules and regulations in Arizona goes through the rest of the paperwork, and for a question about your own association's documents, talk to an Arizona real estate attorney.

On a lot in Scottsdale's Environmentally Sensitive Lands area, part of the land may have to stay natural desert for good. The City of Scottsdale's ESL Overlay page says the overlay covers about 134 square miles of desert and mountain land north and east of the Central Arizona Project canal, and that the share of a property kept as Natural Area Open Space ranges from about 15% to 80% depending on slope, landform and any reductions. The city's Guide to Natural Area Open Space says no grading, filling, clearing or excavation is allowed in that easement, and that walls, pools and barbecues may not be built in it.

That matters when a buyer wants to add a pool, a casita or a bigger yard and the land isn't available for it. The city's guide says a NAOS easement should show up on the current title report under Schedule B or on the subdivision plat, and that it stays with the property after a change in ownership. Here's my post on Scottsdale hillside lots and the ESL ordinance. The City of Scottsdale decides what applies to a specific lot, so confirm with the city and with a surveyor or land use attorney before you count on building anything.

It can, because a buyer and an appraiser both ask about it. Fannie Mae's Selling Guide, section B4-1.3-05, says that when an addition was made without the required permit, the appraiser must comment on the quality and appearance of the work and its impact, if any, on the market value of the home. A buyer is going to ask for the permits, so it helps to have them.

Arizona's contractor licensing law, A.R.S. 32-1121, treats an owner-builder offering a home for sale within one year of finishing the work as evidence the work was done for sale. If you have a converted garage, an enclosed patio or an addition, look up its permit history with the City of Scottsdale before you list, and ask an Arizona attorney or the Registrar of Contractors about anything that was never permitted.

An older kitchen by itself may not move the condition rating much. The joint Fannie Mae and Freddie Mac rating definitions list kitchens or bathrooms that are dated but fully functional as an example of a C4 home. A floor plan that doesn't work the way buyers near you want to live is harder to change than a kitchen, and the appraiser handles it the same way as everything else, by comparing your home to sales and adjusting for how the market reacted.

A pool is often checked separately from the house. Under Arizona's home inspector rule, R4-30-301.01, a certified home inspector isn't required to inspect a pool or spa as part of a home inspection, and Arizona's pool barrier law is A.R.S. 36-1681. If your pool equipment is old or the barrier hasn't been looked at in years, find out where it stands before a buyer's pool company does.

A leased system doesn't add to the appraised value. Fannie Mae's Selling Guide, section B2-3-04, says that for solar panels that are leased or covered by a power purchase agreement, the value of the panels cannot be included in the appraised value of the property. If a buyer is going to take over the lease, check the lease terms for what the solar company requires.

If you're selling with a lease, get the transfer requirements and the buyout figure from the solar company before you list. Here's my post on a solar lease versus a solar purchase when you sell.

A problem that's known and written down is something a buyer can price before they make an offer. A problem that turns up during escrow is something they price after, and that's usually a harder conversation for the seller. So when you fill out your disclosure, be complete and attach the invoices, permits and warranties you have.

Here's my post on what you have to disclose when you sell a house in Arizona. For a question about your own disclosure, talk to a licensed Arizona real estate attorney.

1. Walk the major systems. Note the age of the roof, the air conditioning, the water heater and the electrical panel, and find the invoices and warranties.
2. Look at what's around the lot. Check the airport maps on the Arizona Department of Real Estate's website, and drive past at the busy times of day.
3. Ask the HOA for its statement. Look for special assessments, liens, open violations and pending lawsuits.
4. Read the title report's Schedule B. Look for easements, and on an ESL lot, any Natural Area Open Space easement and where it sits.
5. Pull the permit history. Compare what the City of Scottsdale has on file with every room and addition in the house.
6. Find your solar contract. Know whether you own, finance or lease the system, and get the transfer and buyout terms.
7. Get a number from sales. Ask for a comparative market analysis, or hire a licensed appraiser, so the price reflects how buyers near you reacted to the same issues.

The first is pricing from a neighbor's sale without asking whether that home had the same setting. If your home sits on a busier street than the one you're comparing it to, the appraiser is told to address that, so the comparison has to account for it too.

The second is finding out about a special assessment, a lien or an open violation from the association's statement after there's already a contract. The third is buying a home with a plan for a pool or a casita without checking the title report and the city's records for what the land allows. And the last is assuming leased solar counts toward the appraisal. Fannie Mae's Selling Guide says it doesn't.

If you're selling a home with a 15-year-old roof and an air conditioner that's original to the house, I'd have a licensed roofer and an HVAC company look at both before you list, so you know whether a buyer's lender is going to ask for repairs and can decide whether to fix them or price for them.

If you're buying a hillside home and the yard behind it is natural desert, find out whether that desert is a Natural Area Open Space easement before you plan a pool there. The title report and the city's records will tell you.

If you're selling a home in an HOA community with a special assessment the board approved this year, ask the association for the amount and purpose in writing before you list. A buyer is going to see it in the statement either way, and I can price the home knowing about it.

I look at the house and what's around it, then pick the sales that had the same kind of issue. At the listing presentation I bring three prices and you choose, and here's how I prepare and price a home. If you'd like a number first, start with what your Scottsdale home is worth, and if you're buying, I'll pull the permit history, the HOA statement and the title report for an address during your inspection period.

If you're wondering how one of these affects a home you own or one you're looking at, call me at (480) 203-6605 or send me a message.