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Home appraisals

Spurgeon Appraisals has provided home valuation services for properties throughout northeastern Missouri, western Illinois, and southeastern Iowa. Below you will find a link to a page describing our normal service areas for home appraisals. However, we have often done work outside of these areas, so you should still call us for appraisals in counties or cities near these. Or we could even refer you to another qualified appraiser in your area.

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On the remainder of this page, you will find our past newsletters on the topic of home appraisals and related topics. Be sure to check this page often for updates, or subscribe to our newsletter for other kinds of helpful articles.

Use the search feature below to find what you want to know.

When Interest Rates Change

by Matt Dutton, State Certified Trainee Appraiser

August 2019

The housing market seems to be booming across the country, spurred in no small part by the Federal Reserve's continual interest rate cuts. Lower mortgage rates, coupled with a strong labor market, caused home sales to exceed expectations last month. According to a Reuters article (see link below), existing home sales rose to a seasonally adjusted rate of 5.42 million, surpassing the original forecast of 5.39 million units in July. This was the first time in almost a year and a half that this figure was higher than the previous year's figure. This is because the housing market struggled the year before due to constant interest rate hikes.

Home interest rates

A steady stream of rate cuts since December — the first cuts since the recession in 2008 — have been a boon to the housing market. The Fed drops interest rates to encourage borrowing and to spur the economy on. Similarly, it raises rates periodically to cool the economy. The Fed alters the rates to keep pace with inflation. When inflation is low or stable, people don't have to worry as much, and the rates can be raised. Rates drop when the economy slows. The consequences of the Fed's decisions have wide-reaching effects that extend well beyond the housing market, into the stock market and basically any form of credit in this country.

Home interest rates

The question is, how does this affect our housing market?

Rural areas like ours generally react less dramatically to the ebbs and flows of the economy, in comparison to more metropolitan areas. However, a consistently low interest rate can draw new buyers into the market who can more easily obtain credit. This drives prices up. If these prices push up too high though, they can price many would-be buyers back out of the market. For instance, Palmyra and the other smaller communities along the Missouri side of the river have seen a spark in demand in recent years. This has pushed housing prices up beyond where they would be if they were solely keeping pace with inflation. This isn't to say that all market participants are priced out of the market around here. It just means a dollar doesn't go as far as it did.

Home interest rates

It's hard to predict what impact the Fed's manipulation of the interest rates will have on the housing market locally. With President Trump pushing for more rate drops, it could draw more new would-be buyers in and drive housing prices up even further. In more rural markets like ours, the number of would-be buyers is limited, so the impact of more interest rate drops could be minimal. Really the only thing that is safe to say is that the interest rate won't remain the same for very long.

For more information, visit:

https://www.reuters.com/article/usa-economy-housing/corrected-us-existing-home-sales-rise-boosted-by-lower-interest-rates-idUSL2N25H0H1

https://www.usatoday.com/story/money/2019/07/30/federal-reserve-why-does-fed-lower-interest-rates/1861483001/

https://www.businessinsider.com/how-the-fed-raises-interest-rates-2017-12

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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HOUSING TRENDS IN MARION COUNTY

by Matt Dutton, State Certified Trainee Appraiser

March 2019

Residential sales prices in Hannibal saw a pretty hefty spike last year, after remaining fairly stable over the last few years. The median sales price for single family residences in Hannibal was $105,000 from March 2018 to March 2019. The median sales price from 2017-2018 was $90,250. These numbers are based on 215 and 210 sales, respectively. The median is generally the best indicator of a range of sales, because higher and lower sales can skew the average of a range of numbers. Over the last year, seven homes in Hannibal sold for under $10,000, and six homes sold for over $300,000. The median tends to be more reliable when there is such a large divide between the upper and lower ends of the range.

The Hannibal housing market has generally been trending upward in recent years. This could be due to efforts to revitalize some of the more depressed areas of the city as well as a growing demand for housing in certain sections of the city, particularly west Hannibal. From March 2014 to March 2015, the median sales price of a home in Hannibal was $87,000. That number rose by just over 5 percent the following year and by almost 2 percent from 2016 to 2017. Sales prices dipped from 2017 to 2018 by 3.3 percent. The median sales price from March 2017 to March 2018 was $90,250. From that point to the present, the Hannibal market has seen a more than 16 percent increase.

Hannibal Palmyra Home Values

The market is imperfect, and any number of factors can influence such a dramatic rise. One year certainly doesn't make a trend. However, the steady increase in sales prices coincides with an 8.6 percent rise in household income of Hannibal residents over the last year.

Palmyra, which has been one of the stronger markets in the area, didn't see the same increase over the last year. From March 2018 to March 2019, the median sales price of homes in Palmyra was $121,250. From 2017 to 2018, that number was $133,000. The last year's median sales price mirrors the 2016-2017 median price. Median household income increased by 6.5 percent over the last year, and Palmyra averages around 30 sales a year. From 2015 to 2018 the median sales prices of homes in Palmyra rose by almost 19 percent. The Palmyra market has seen several years of steady growth, fueled largely by lower property taxes and a strong demand for residences in Palmyra's school district. You can see this in the charts below, as well as the similar information for Hannibal.

Marion County Residential Market

Again, one year doesn't make a market trend. However, these figures do point to, at the least, a stable housing market in Marion County at the moment. Family incomes and the sales prices of single family residences appear to be increasing concurrently.

You can always trust that Spurgeon Appraisals is carefully following real estate markets and providing valuation services with current market data. Call us today and let us help you with your appraisal needs.


Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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APPRAISING NEW CONSTRUCTION

by Staff Appraiser

June 2018

During the past several years, we have seen quite a bit of new construction in our market area. Most of the new homes currently going up in our area are custom-built homes, for which the buyer has purchased a lot or tract of land and has hired a general contractor to construct the home for them. There are a few instances where a builder/developer is constructing spec homes and selling them after completion, but this accounts for only a minority of the construction in our area, and many times these homes are sold prior to completion, with buyers even choosing the level of some of the finishes and/or interior design.

home appraiser near me

Most of the new construction homes that we have seen built during the past couple of years have construction costs within the $250,000 to $400,000 range. One of the trends we are continuing to see with custom homes is that borrowers are willing to fork out extra money now for features that may either take a long time to pay for themselves, or will never pay for themselves, but will add to the energy efficiency or comfort of the home. A classic example would be a ground-source heat pump, which are found in most of the new custom homes in our area. These are far more efficient than any other HVAC, but given the relatively low price of crude oil during the past several years (and subsequently natural gas/propane), we would have expected to see a move away from GSHPs. Instead, they appear to be as popular as ever in this area. Other items that we often see are environmentally friendly insulation, extreme amounts of insulation, and 2x6 exterior walls. I believe the popularity of most of these energy-efficient upgrades is driven by a fear of increased future energy costs, which is pushing market participants to be as independent as possible from purchasing energy in any form.

Appraising new construction can be very challenging. Sometimes we are given a list of raw materials and asked how much they will be worth when nailed together. How the materials are assembled is just as important as the quality of the materials used. For this reason, when we are asked to appraise a new home scheduled to be constructed as if it is complete, we try to obtain as many detailed plans from the architect, designer, and builder as possible. After all these items are gathered and analyzed, a conversation with the borrower may be necessary to obtain additional information.

home appraisals northeast missouri

Functional obsolescence is difficult to quantify in the appraisal of not-yet constructed properties. Sometimes, a person who is building a home to fit their own needs and doesn’t ever plan to sell it will design a property with market-perceived functional obsolescence. An example of this might be a bachelor who constructs a master bedroom with a tiny master closet only large enough to accommodate a single modest wardrobe, or a couple with young children who construct a nursery room that can only be accessed through the master bedroom. Sometimes these items are curable, and sometimes they are not.

What I’ve found is that custom new construction homes that haven’t been built yet are more complex to appraise than a home that has been completed already. In completing many of these types of appraisals, I’ve learned that through careful analysis of plans, materials, and design, it is possible to arrive at an accurate and credible opinion of market value.  If you are looking for an appraiser with experience appraising homes that are to be completed, call us today.

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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2016 HOUSING TRENDS

by Staff Appraiser

January 2017

At the end of every year, we like to take sales data and crunch the numbers to determine trends for the past few years. I used data from Quincy, IL, as this is the largest residential market that we work in, and where many people from the surrounding areas travel for employment, entertainment, shopping, etc. Our sales data includes single family detached residences and condominium units. It does not include transactions where more than one living unit was being sold, except in the rare cases of a large home with an accessory unit. This data was then grouped by year and sorted, and the data was analyzed and used to create the graphs below and draw the following conclusions.

home appraiser Quincy

Sales volume increased somewhat from 2015, and in general appears to be slowly increasing.

home appraisal Palmyra

Regarding residential sales price, the market appeared to strengthen significantly in 2015, with the average price increasing substantially when compared to 2013 and 2014. However, during 2016, both average and median sales prices of homes in Quincy leveled off, with the average price increasing slightly, but the median price decreasing somewhat. This is not entirely unexpected, as interest rates increased during 2016, which tends to make homes less affordable. The median sale price tends to be a better measure of central tendency, as it is less prone to fluctuations from sales in extreme high and low price ranges.

appraiser for residence

In 2015, the number of days properties sat on the market prior to selling continued to decline. Days on Market can be influenced by several factors, such as unreasonable pricing (both too high and too low), a lack of marketing/advertising by the listing broker, or any number of other reasons. In 2016, median DOM continued to decline, while average DOM inched higher, although it can tend to give too much weight to properties that are improperly marketed and sit on the market.

I anticipate interest rates will continue to creep up during 2017, which may put a damper on any significant price increases, although it is a positive sign that the market does appear to have held steady during the past year, despite the previous rate increases. I view this as a sign that demand in the market is strong enough to sustain prices despite the increased cost of capital.

The appraiser cautions the reader not to place too much value on market averages. While they can be useful for determining the strength of the market as a whole, there is no substitute for an experienced and qualified appraiser making a visit to determine the market value of a specific property. Spurgeon Appraisals has the expertise to account for the numerous variables affecting the value of a particular residence, and we bring this knowledge to every appraisal we perform.

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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2015 HOUSING TRENDS

by Staff Appraiser

February 2016

At the end of every year, we like to take sales data and crunch the numbers to determine trends for the past few years. I used data from Quincy, IL, as this is the largest residential market that we work in, and where many people from the surrounding areas travel for employment, entertainment, shopping, etc. Our sales data includes single family detached residences and condominium units. It does not include transactions where more than one living unit was being sold, except in the rare cases of a large home with an accessory unit. This data was then grouped by year and sorted, and the data was analyzed and used to create the graphs below and draw the following conclusions. Sales volume was generally steady, with less than 8% variation from year to year.

how much is my house worth

With regard to average residential sales price, the market appears to have strengthened significantly in 2015, with the average price increasing substantially when compared to 2013 and 2014.

house appraisal northeast missouri

The number of days properties sat on the market prior to selling continued to decline in 2015. Days on Market can be influenced by a number of factors, such as unreasonable pricing (both too high and too low), a lack of marketing/advertising by the listing broker, or any number of other reasons. Regardless, anytime we see such a substantial drop among such a large sample size, it is a sign of a strengthening market.

house appraisal Quincy

After crunching the above data, I wasn’t sure if any of the increase in price might possibly be attributable to larger homes selling, so I averaged the prices per square foot. Again, it appears that the data indicates an upward trend in general.

There are several possible reasons for the increase in sales prices in the Quincy area. The realization that low interest rates may not last forever is the most likely explanation. Many first time buyers who had previously been on the fence and were hesitant to purchase therefore began to shop in earnest. Economically, the area has been steady, although several large retailers announced plans to open stores in the area during 2015, which appears to have pushed home values higher than the rate of inflation.

The appraiser cautions the reader not to place too much value on market averages. While they can be useful for determining the strength of the market as a whole, there is no substitute for an experienced and qualified appraiser making a visit to determine the market value of a specific property. Spurgeon Appraisals has the expertise to account for the numerous variables affecting the value of a particular residence, and we bring this knowledge to every appraisal we perform.

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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PREPARING FOR THE APPRAISER

by Staff Appraiser

December 2015

When calling to schedule appointments to look at properties, it is common to hear a touch of anxiety in the homeowner’s voice. After all, the homeowner is welcoming a stranger into the privacy of their dwelling, during which the stranger will critically look over the home, and make a judgement about its value. In this newsletter, I’ve tried to address a few of the concerns homeowners often have about having an appraisal done, and what you can do to help the appraiser.

Welcoming a stranger into your home poses obvious risks. The Missouri Real Estate Appraiser Commission understands public uncertainty, and requires appraisers to be fingerprinted and conducts a background check on all appraisal license applicants, and requires appraisers to sign a certification at the time of renewal stating they have not been convicted of any criminal offenses. Additionally, many lenders also require background checks on their appraisers periodically in addition to the state-mandated requirements.

appraisal of home

The next question for most homeowners is, “What can I do to prepare for the appraiser’s inspection?” Typically, I advise homeowners to do two things. The first is to complete any ongoing home improvement projects or repairs that are in progress. Many buyers want to purchase a move-in ready home, so if there are holes in the walls, ceilings, or floor coverings, the property may sell at a discount, so if possible, it is wise to complete repairs prior to the appraiser’s visit. The second step is to do some general tidying up around the home, removing any clutter that might impair access to any rooms. We are not evaluating your housekeeping, but it is nice to be able to walk through a home without stumbling on a pile of dirty laundry in the floor. It is also worth noting that if the appraisal is being done as part of a lending transaction, your lending institution will also see the photos the appraiser takes. Furthermore, please have large dogs on a leash or in a kennel, as some can create a danger for the appraiser, and even the friendliest can create a distraction.

appraisal for house

The night before the appraiser’s appointment, take a couple minutes to write out a list of improvements to the home during the last 15 years. (Don’t panic if you haven’t owned your home that long; just provide what you know, as some information is always better than no information.) The most important thing we look for are kitchen and bathroom remodels, but don’t forget improvements such as roofing, siding, or flooring. If you know of homes in your neighborhood that have sold without the aid of a realtor, it can be helpful to mention those to the appraiser as he inspects the home.

By taking a few steps ahead of time, you have peace of mind knowing that you’ve done everything you can to ensure that your home is valued as accurately as possible.

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.

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WHY IS MY HOUSE WORTH LESS?

by Mason Spurgeon, Certified General Real Estate Appraiser

December 2014

Clients often ask, “Why is my home worth less than what I paid to have it built?” As appraisers we dread this question, because of the complexity of the answer and the fact that the client/borrower has a vested interest in the property.  In this newsletter, I will do my best to explain a few of the reasons that a home may be worth less than the cost of building it, even if the home was just finished. While a variety of factors could affect the value of a home, these are some of the most influential.

A home is very expensive to build and even more expensive when it is customized.  Many clients tend to go into a building project with the best intentions of keeping it cheap, but after starting construction their minds start to wander.  They begin to think: “What if I move this wall over there?” or “I think we should put in better kitchen cabinets, especially if we are going to be here for the rest of our lives.”  This raises the budget and may therefore begin to limit the number of buyers in the market—which could lower the market value of your home.

Furthermore, a person wanting to spend a large amount of money on a house may not like the custom features of your property. Such buyers will not pay the cost new for your home with features they may want to change. Why should they, when they could just build their dream home for the same amount of money? This is a simple application of the “Law of Substitution”—and it could further decrease the value of your home.

Houses also tend to have less value if they are located on a large number of acres. For example, a larger home sitting on a lot in a subdivision may cost the same amount to build as a home sitting on several hundred acres, but typically the home on the smaller number of acres will be worth more than the home on the larger acreage.  This is mostly because of the limited number of buyers in the market for larger properties.  Buyers wanting only a lot with a nice home are more prevalent due to the overall price point, whereas buyers wanting a large acreage tract are more limited.

Buyers of large acreage properties also put less emphasis on improvements.  Typically they are buying the ground for an investment or for recreation, and so improvements are viewed as a nuisance.  A typical buyer wanting a hunting cabin on a larger number of acres does not care if you have a 4,000-square-feet home with granite countertops, and he will not pay what it cost to build it new, even if the home was just constructed.

Everything described in this article falls into the category of “external obsolescence,” which is the difference between the cost new after depreciation and what the market would pay for that improvement. Unfortunately, there is very little a client/borrower can do about external obsolescence because it is driven by the market participants and not the individual improvement or cost new.  It’s one of the constants in life, like death and taxes.

Appraisers have to look at a home from the viewpoint of typical market participants: buyers and sellers. This often requires us to place less value on a home than the cost to build it, even if it was just recently built. People should be aware of this when preparing to build or sell a home.

Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.