By Kevin Hogencamp, Contributing Writer
As a property appraiser, James Toro is often asked whether it’s wise to install a backyard swimming pool.
His answer has never wavered: “It depends.”
“I say go for it, but do it for the right reasons. Maybe for the kids, maybe for the neighbors or maybe for yourself,” said Toro, senior managing director and partner of Capstone Valuation Advisors in Jacksonville.
But don’t expect a return on a swimming pool investment, Toro advises.
“It just doesn’t work that way,” he said.
A pool’s value — and even a fireplace’s financial worth to a home — is determined by age, condition and other factors, including the neighborhood.
“How valuable is a fireplace at the beach? Probably less valuable than on the Northside or in Nassau County away from the ocean,” Toro said.
Speaking at the monthly Mortgage Bankers Association of Jacksonville meeting in May, Toro and associate Peter Sproules described what’s involved in providing third-party opinions of property values.
Banks use appraisal reports — along with the applicant’s income, assets and credit history — to determine how much it will loan on a property.
Toro, who has extensive experience evaluating residential and commercial properties, said appraisers’ responsibilities boil down to objectivity.
“I always tell people that I train in the business: Try to paint a picture for the reader (of the appraisal report) and try to allow them to visualize what this house is like and what the setting of the house is like,” he said.
The swimming pool and fireplace questions were among the areas of curiosity among the mortgage bankers.
Another common question appraisers get is whether enclosing a garage is a sound investment decision.
Again, not necessarily.
“It usually doesn’t add any value to you at all because it is taking away from your covered parking area,” said Sproules, a residential specialist.
Updating kitchens and master bathrooms, on the other hand, tend to add value.
As do adding summer kitchens and other living space outdoors.
“Those areas are generating the most interest as far as what buyers are looking for,” Sproules said.
According to industry standards, appraised values largely depend on the property’s condition and the recent sales prices of comparable properties.
Lenders are particularly reliant upon appraiser’s reports being impartial and accurate so the bank doesn’t lend borrowers more money than the property is worth.
Toro and Sproules said between market and public records research, and ensuring that every area in and around the home is measured and photographed, the appraisal process is meticulous.
“If you are going to do a responsible job, it’s much more work than it used to be,” Toro said.
Sproules once was able to appraise as many as 20 homes a week. Now, he’s satisfied with 10.
“And to do 10 in a week, he’s putting in some long hours,” Toro said.
Sproules said he’s able to get more done in less time when the residents stay out of his way.
“I’m measuring and taking notes and trying to look at all the facets of the house. I’d just as soon talk to somebody about what I saw later,” he said.
A relatively new challenge for appraisers — at least, in terms of their communication with clients and others — is the website, Zillow.
The Wall Street Journal reported in 2007 its study found Zillow’s property estimates “often are very good, frequently within a few percentage points of the actual price paid. But when Zillow is bad, it can be terrible.”
Sproules said he doesn’t like hearing property owners mention Zillow.
“People will say, ‘I looked at Zillow before you got here and this is what I figure my house is worth,’” he said. “I just cringe when I hear that and then explain that Zillow doesn’t look at your house specifically … and they don’t necessarily understand.
“That’s just a difficult avenue we have to go down sometimes,” Sproules said.
Toro said in addition to assessing the property firsthand and accumulating timely, accurate and relevant data, the best appraisers have another tool in their bag: Experience.
“There is no cheat sheet that works like having been in the business and knowing what to look for,” he said.