What changes when the subject is brand-new, including finishes, lot premiums, and why appraisers often use different techniques
Appraisers use the same three valuation approaches for all residential properties: the sales comparison approach, the cost approach, and the income approach. However, the weight given to each approach and the data sources used differ for new construction compared to older homes.
For new builds, appraisers often rely more on the cost approach and careful analysis of builder pricing and lot premiums, while for older homes the sales comparison approach usually drives the final opinion of value.
- Older homes: there is usually a neighborhood history of closed sales, so appraisers select recent, nearby comps and make adjustments for condition, age, and features. Lenders and government-sponsored entities typically expect a minimum set of relevant closed sales reported in the sales comparison approach.
- New construction: direct comps inside the same subdivision may be limited or unavailable, especially if many recent sales were builder-to-buyer transactions or if inventory is low. When same-subdivision comps exist but involve builder incentives or sales concessions, appraisers must disclose and adjust for those factors, or reach outside the subdivision to similar new homes.
For brand-new homes, the cost approach (land value plus replacement cost of improvements minus depreciation) often yields a reliable cross-check because depreciation is minimal and construction costs are current and documentable. This approach is especially useful when comparable sales are scarce or not directly comparable.
Note: While the cost approach is useful, it does not always equal market value, since buyers rarely pay exactly the cost to reproduce a home. Appraisers reconcile all approaches to decide the final opinion of value.
- New homes frequently offer a menu of upgrades, such as countertops, cabinetry, HVAC, and smart-home packages. Appraisers must document which features are standard versus upgraded, and determine how the market treats those upgrades, meaning whether buyers in the neighborhood pay a premium for them.
When upgrades are custom or unusually high-end, they may not be fully recoverable in market value and require supporting market evidence.
- Older homes may need depreciation adjustments for deferred maintenance or remodeling; appraisers make condition and effective-age adjustments to reflect this.
New construction projects frequently assign lot premiums, which are extra costs for corner lots, wooded lots, waterfront views, or lots with better orientation.
Appraisers treat lot premiums as part of the land value component and must show market support, either through past lot sales, buyer behavior in comparable subdivisions, or documented market demand for specific homesites.
Important: A developer’s listed lot premium (what they charge at sale) is a clue, but the appraiser seeks independent market evidence that buyers actually pay that premium in arm’s-length transactions.
Builders sometimes offer incentives, such as closing cost help, upgrades, or interest rate buydowns, or they may sell homes to affiliates. Appraisers must identify these concessions and either adjust or exclude those transactions as comps when they do not reflect typical market behavior.
Lender and FHA guidance instructs appraisers to note unusual concessions and to be cautious when using builder sales as primary comparables.
New homes come with construction documentation, such as certificates of occupancy, third-party inspection reports, and builder warranties. Appraisers document these items because they affect perceived condition, timing of delivery, and marketability, all of which are relevant to value.
Older homes, by contrast, require careful condition analysis and may need separate inspections to confirm mechanical systems and structure.
- New construction: appraisers typically present all applicable approaches. You will often see the cost approach shown prominently as support, with the sales comparison approach used where suitable comps exist. The appraiser reconciles the indicators into a final opinion.
- Older homes: the sales comparison approach usually dominates, with cost or income used only as secondary checks when appropriate.
- Buyers of new homes: understand that appraisals may come in lower than the sales contract if the market does not support builder upgrades or lot premiums. Try to ensure comparable closed sales exist for similar finished homes.
- Sellers and builders: document upgrades, provide recent subdivision sales data, and be transparent about concessions so appraisers can find market support.
- Homeowners seeking a refinance on new construction: expect the appraiser to consider construction completion date, warranties, and whether the home’s finished condition matches what the contract described.
- Understanding the Role of Comparables (“Comps”) in Your Appraisal
- A primer on the cost approach, explaining when it is used: https://www.investopedia.com/terms/c/cost-approach.asp
If you are buying or selling a new construction home in Hampton Roads and want an appraisal that reflects local market realities, request an appraisal or call us at 757-286-4740, and we will explain which approach will most influence value for your specific property.
When it comes to determining your home’s fair market value, nothing carries more weight than comparables, or “comps.” Whether you’re refinancing, selling, or securing a home equity line, an accurate appraisal hinges on choosing the right comps. This guide will explain what comps are, how appraisers select them, and how you can help ensure a smooth, accurate valuation.
Comparables (“comps”) are recently sold properties similar to yours in key aspects—location, size, condition, and amenities—and they serve as the benchmark for your home’s value. Appraisers typically use at least three closed sales within the past 3–6 months that are geographically close to your property realtor.com.
Access to MLS Data - Most appraisers pull comps directly from the Multiple Listing Service (MLS), ensuring they use verified, arms-length transactions. Public records may supplement MLS data when needed appraisaltoday.com.
Bracketing Method - To account for differences, appraisers often bracket the subject property by including:
Adjustments for Differences - If a comp has features your home lacks (or vice versa), appraisers make dollar-value adjustments. For instance, if your home has an extra bathroom, they subtract the estimated cost of that bathroom from the comp’s sale price.
Market Trends & Timing - In rapidly changing markets, older sales may require upward or downward adjustments for timing. Appraisers document these adjustments to reflect current conditions.
Research and share 3–5 recent nearby sales that mirror your home’s characteristics.
Supply invoices or permits for major improvements (e.g., new roof, HVAC). This helps avoid negative adjustments.
If your home has a rare feature—such as a private dock or solar panels—provide comparable sales with similar amenities.
Conclusion
Comparables are the backbone of any home appraisal. By understanding how they’re selected and adjusted—and by actively assisting your appraiser with accurate, organized information—you can help ensure a smooth, fair valuation of your property. Mastering comps puts you in control of your home’s financial destiny.
Note: This content was generated with AI assistance and reviewed by an experienced appraiser for accuracy.
5 Key Steps in the Home Appraisal Process
Helping Hampton Roads homeowners understand what to expect when ordering a home appraisal
The process starts with you! Simply order your home appraisal through our secure online form. You’ll provide basic property details—address, type of loan, and desired turnaround time—and we’ll confirm your fee quote and appointment window within 24 hours.
Tip: Be sure to include your property’s full street address exactly as it appears on your deed to help us match municipal records quickly.
Once your order is in, we gather public records and recent sales data (known as “comps”) for homes similar to yours. We consult multiple sources—county tax records, the MLS, and tools like the Appraisal Foundation’s Official Site—to ensure we’re using the most up-to-date information.
Tax records confirm lot size, year built, and ownership history.
MLS and sales databases provide sale prices of comparable homes in your neighborhood.
Automated Valuation Models (AVMs) may give an estimate of a possible sales price but in many cases the “comps” used in these models are not locationally comparable. Additionally, these models use comps that are not completely verified and they never consult the selling agents that know your particular neighborhood.
Next, we visit your property to:
Determine your gross living area and we observe your site’s features.
We Inspect interior features (bedrooms, baths, kitchens and any upgrades).
Evaluate condition—roof age, HVAC, foundation, and any deferred maintenance.
Photograph key elements (interior, exterior, and comparable properties).
This firsthand inspection ensures no important detail—like a new deck or finished basement—gets overlooked.
Back at the office, we reconcile all gathered data to arrive at a final value. Our analysis includes:
Sales Comparison Approach
Cost Approach (especially for new construction)
Income Approach (for rental properties or multi-unit homes)
By triangulating these methods, we deliver a well-supported appraised value that stands up to lender reviews and tax assessors alike.
You’ll receive a comprehensive appraisal report within 3-5 days after the inspection date. It includes:
Final value conclusion
Market trends and neighborhood analysis
Detailed comparables with sale prices and adjustments
Photographs of both interior and exterior
Appraiser’s certification and signature
You can review the report immediately and share it with your lender, attorney, or tax consultant. If you have any questions or wish to challenge an item, we are happy to discuss the findings.
Local Expertise: Decades of experience in Hampton Roads real estate.
Fast Turnaround: Secure online ordering and same-day confirmations.
Accuracy You Can Trust: Fully compliant with USPAP standards.
Ready to get started? Request your appraisal today and gain confidence in your property’s true value!
How long does an appraisal take? Typically 3–5 business days after inspection. Rush options are available.
Can I attend the inspection? Absolutely! We welcome homeowners to point out upgrades.
What if I disagree with the value? Contact us for a free consultation—we are happy to discuss your concerns.