Determining a home’s value is not an exact science and it’s never a fixed number. Very few people outside of the real estate business can accurately come up with a value. Why? Homeowner’s think their house is always “the best”. Appraisers look at a home based primarily on statistical data. Buyers and Realtors® have their own views. Depending on who you are, you may give more weight to different factors. So, will you have a wide variety of opinions? You bet. These are some of the factors to consider:
1.) The home’s square footage
2.) Quality of construction
3.) Home design, general appeal, amenities
4.) The home’s floor plan
5.) Proximity to transportation, schools and shopping
6.) Lot size, topography, landscaping, view
7.) In the case of a purchase transaction, what a seller and buyer negotiate also contributes to the value
8.) And of course, the most recent sales of similar properties nearby
A home’s estimated value is almost always determined by either an appraisal or a comparative market analysis. These are the most accurate ways to determine what the home is worth. An appraisal is a written analysis of the estimated value of the property. The appraiser’s job is to determine the approximate fair market value. A properly licensed appraiser who has good experience, expertise and is familiar with the area creates the appraisal. Anyone can order an appraisal, which typically costs $200 to $400. It will include a complete “breakdown” of the property and compare it to recent comparable sales in a “grid” format. Photos of both the subject and the comparables will be included. A full, formal appraisal averages between 12 and 20 pages, not including the photos. There is a ton of information included.
A comparative market analysis is an informal estimate of market value that a real estate agent or broker determines based on comparable properties that have recently sold. If a new bank loan is required to purchase a home, the majority of the time the bank will want something from an appraiser. Regardless of what the buyer, seller or Realtor® determine as the value, the final say so is the appraiser’s. On the other hand, a buyer or seller may not agree with the appraiser’s value for other reasons. Unless all parties agree, you could have problems closing the transaction. To make things even worse, different appraisers can see values differently. In the case of a disputed value, it’s often beneficial to get a second opinion. That will cost someone more money, but may help to solve the issue. With condos or planned community properties, it’s a bit easier to determine value. The first is because the place you look is within the project itself because it will likely contain nearly identical properties.
Can you determine a property’s value through the internet? The internet is a great source to get a rough idea of value, but that’s all. There are simply too many variables to take into consideration. If you don’t have that kind of experience, you are going to miss the number. A professional Realtor® is always the best place to start. As always, if you need help or advice, just respond to this email.
