Suppose your home is located in the valley and your best friend owns an almost identical home but it’s on top of a hill with amazing panoramic views. Everything but the location is identical. Which one has the higher resale value? When valuing two similar pieces of property, location, location, location, is king and everything else is secondary.
While it’s seems simple to say that the home with the awesome view is “worth more” than the home without one, there are no simple rules on how much value the view adds to the home..
Agents and Appraisers Role in Determining the Value of the View
Naturally, Real estate professionals have different opinions on this. Some agents claim that there is no premium for a view while others say that an amazing view can add up to 15 percent to the value of the home when compared against similar homes without the view.
A study conducted by researchers Mauricio Rodriguez and C.F. Sirmans and published by Texas Christian University shows that a view adds between 5 to 8 percent to the market value of a home.
The Appraisal Institute gives professional appraisers very vague guidance when valuing a property and considering the view. Appraisers are instructed to give value to the view but the institute doesn’t tell them how to arrive at that value.
What about the views that are not so great? A view of garbage dump across the street will certainly drag down the value of the property but by how much?
Where is the View?
Is what you’re seeing out the window located close or far away? Patrick Brown and Beverly McCabe, in a report prepared for the American Appraisal Institute, claim that a close-up view is worth more than a faraway view. For instance, an ocean view right outside your window is worth more than an ocean view located several miles away.
A view from the back of a house influences the home’s value more than a view from the front according to the research.
This is because most people there time in the back of the home and almost no one spends much time in the front of a house. Some would give a view from the front almost no value.
The additional value is added if the view is from areas of the home that are used the most, such as the master bedroom, dining room and kitchen.
The Worth of a View
After spending years studying the subject of the value of a view in newly constructed homes, Ernest V. Siracusa, a Southern California real estate market analyst, has come up with a range to measure the value added for different types of views and view orientations. It runs from 1 percent to 2.5 percent for a home overlooking open space to 15 to 20 percent for an unobstructed water view.
Mr. Siracusa believes that if that view is of the ocean, the value of the home may increase up to 30 percent more than similar homes without the view.
Here in Collin County we do not have any ocean views but we do have amazing views of lakes, trees, parks, golf courses and other natural amenities and these views do create value. It’s important to spend the time to assess the value of the view so that home sellers and buyers know what the true market value of the property is.