Designing for Value: How to Ensure Your Custom Home Appraises Strongly

Building a custom home is an exciting opportunity to design your dream space, but many homeowners overlook a crucial factor—appraisal value. Whether you're financing through a loan or planning for future resale, appraisers and lenders use specific criteria to determine your home’s value. If you don't design with these in mind, you could face challenges securing a loan or maximizing your home's market value in the future.

At AV Architects + Builders, we have decades of experience designing custom homes that balance luxury with practical considerations like appraisal value. We know how to incorporate features that meet lenders' and appraisers' expectations while reflecting your personal style. Our design strategies ensure that your home not only looks incredible but also appraises at a strong value to protect your investment.

In this article, we’ll outline key design decisions—such as prioritizing living square footage, including enough bedrooms and bathrooms, and ensuring your home compares well to the neighborhood—that will enhance your home's appraisal value. By the end, you'll know how to design a custom home that meets your needs while maximizing its future worth.

Improve Your Custom Home’s Appraisal: Design Tips for Maximum ROI

1. Prioritizing Living Square Footage on the Main and Upper Levels

One of the biggest factors an appraiser looks at is the total living square footage, but not all square footage is valued equally. The main and upper levels of a home typically appraise at a higher rate than the lower level or basement. This means that focusing on expanding the main and upper floors of your home, rather than pouring resources into a finished basement, will do more to boost the appraisal value.

Even if you plan to leave your basement unfinished, you can still design the space to accommodate future use, such as adding a framed bedroom or bathroom. While an unfinished basement may not add much value now, the potential for future expansion is a smart investment.

The Astron House, Great Falls, Virginia, AV Architects + Builders, Photography by Maxwell Mackenzie

2. Don't Skimp on Bedrooms and Bathrooms

The number of bedrooms and bathrooms in your home is a critical factor in its appraisal value. When comparing homes, appraisers use other homes in your neighborhood as benchmarks, and if your custom home has significantly fewer bedrooms and bathrooms, it can hurt your appraisal. 

For example, if all the other homes in your area have three or four bedrooms, designing your home with just two bedrooms will lower your appraisal and reduce the amount of money you can borrow. Even if you don’t need an extra bedroom now, adding a flexible space that could be used as a bedroom or office is a smart strategy. This way, your home will match the bedroom count of other homes in the area and increase its appraisal value.

Similarly, ensuring that you have enough bathrooms is essential. A home with only one or two bathrooms in a neighborhood where most homes have three or more bathrooms will suffer in appraised value. For the best ROI, aim to match or slightly exceed the bedroom and bathroom count typical for your neighborhood.

The Astron House, Great Falls, Virginia, AV Architects + Builders, Photography by Maxwell Mackenzie

3. Consider the Garage - It's More Important Than You Think

Many custom home buyers overlook the garage, thinking that it’s not a high priority. However, appraisers and lenders view garages as essential, especially in suburban and rural areas. Whether you personally need a garage or not, its inclusion can significantly impact the value of your home.

"When a client asked us, 'I’ve never had a garage and I don’t need one, will that save me money?' the answer was no," says Francisca Alonso, CEO of AV Architects + Builders. "Not including a garage could penalize you with the appraiser and the lender, since garages are one of the factors they care about."

The size of the garage also matters. In many cases, a two-car garage is the standard, and anything smaller could negatively impact your appraisal. Consider adding at least a two-car garage to keep your home competitive in the market and to avoid potential penalties in the appraisal process.

The Architect House, Great Falls, Virginia, AV Architects + Builders, Photography by Maxwell Mackenzie

4. Make Sure Your Home Compares Well to the Neighborhood

Appraisers always compare your home to other homes in the neighborhood. If your home has drastically different features or lacks essential components (like the number of bedrooms or a garage), it won’t appraise well, and you may struggle to secure financing for the build.

For example, appraisers won’t care if you used the highest quality materials, like premium windows or all-brick siding, if the neighborhood standard is vinyl siding and standard windows. "Appraisers are looking at front doors and budgeting approximately $5,000 for them because that’s the standard for the neighborhood," Francisca explains. "But in a custom home, a front door can easily cost upwards of $20,000, and the appraiser won’t account for that extra cost."

This means you’ll need to carefully balance custom features with neighborhood standards to avoid too large of a gap in appraisal value. While a custom home may never be a 1:1 return on investment, making sure that it aligns with neighborhood norms ensures the delta between appraised value and cost isn’t too significant.

Main Level Modern, Falls Church, Virginia, AV Architects + Builders

5. Think About Resale Value, Even If You Plan to Stay Long-Term

Even if you’re building your forever home, circumstances can change, and keeping resale value in mind is always wise. This means focusing on elements that will make your home attractive to future buyers. The number of bedrooms, bathrooms, and garage spaces are key features that affect both appraisal value and resale value. 

Additionally, consider including a flexible room that can serve as a bedroom, home office, or guest room. This flexibility will appeal to more buyers and boost the appraisal value.

The Astron House, Great Falls, Virginia, AV Architects + Builders, Photography by Maxwell Mackenzie

6. Appraisers Don't Focus on High-End Finishes

It’s important to remember that appraisers don’t focus on high-end finishes like custom cabinets, premium appliances, or upscale materials. While these elements will certainly enhance the aesthetic and personal satisfaction of your home, they don’t contribute much to the appraised value. Appraisers look for standard features like square footage, the number of bedrooms and bathrooms, and the presence of a garage, not the difference between granite and quartz countertops.

If you plan to add high-end finishes, know that while they might not increase your appraisal value, they can still enhance your home’s overall appeal and resale potential. Just be sure to balance those choices with features that appraisers and lenders will value, such as adequate living space and functional design.

The Hill House, McLean, Virginia, AV Architects + Builders

7. Avoid an Unrealistic Budget

One of the most common pitfalls when designing a custom home is working with an unrealistic budget. If your home doesn’t appraise at the value you expect, lenders may not give you the full loan amount you need to build, leaving you to cover the difference out of pocket. To avoid this, work with your builder and lender to set a realistic budget that aligns with the neighborhood and local market conditions.