How to Determine Home Value

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One of the most common questions that I’m asked is, “What’s the Value of my Home?”  For most people, your home is your largest financial obligation or asset. Therefore, its understandable and recommended that every homeowner know the value of their home. There are several methods you can use to approximate how much your home is worth. I’ll briefly discuss a few options, but share with you the best way to know how much your home is worth.

Ways to Determine Value of Your Home

cash-house-smYou might look up your tax assessment, where you find how much your property is valued for tax purposes. Your county assessor website will usually have this information available. However, you want to keep in mind that the value given is only for tax purposes and may not be an accurate market value that you would get if you were to appraise or sell your home.

There are several websites out there that attempt to value homes, including such sites as Zillow and Trulia. While their methods of valuation are correct in principle, due to errors in information that they gather on the properties, we’ve found that these estimates can be off-the-mark, in some cases by a large margin.

contract-smYou may also have a licensed appraiser come out to your home. This is the most accurate method, and a bank or lender will want a professional appraisal done before they will lend money on any property. However, appraisals cost several-hundred dollars. This is where a real estate professional, agent, or Realtor, may be very valuable. Nearly all real estate professionals  will provide you a Competitive Market Analysis (CMA) for free and no-obligation.

What is a CMA report for your home?

We’ve all heard the phrase “Location. Location. Location.”  When it come to real estate, location is almost always the primary factor in determining the value of a property or home. To determine the price of a home, we first look at location. Specifically, we’re looking at the neighborhood.

Second, we need to see what’s happened in that neighborhood recently. A real estate professional is going to do a Comparative Market Analysis (CMA), which in layman terms, simply means that they are going to look at what properties have sold recently and compare them to yours.  Using homes that have sold recently is the most accurate method of accessing value, because it reflects what people have actually paid, rather than a perceived value.

Looking at those sold homes,  we try to find those that are the closest in style and condition to yours.  Often times, homes in a neighborhood were built at the same time and are quite similar.If  this is the case, it should be easy to determine a price. However, when a custom home is involved, or a neighborhood has many different types of homes, adjustments have to be made to access a value. For example, having an extra full bathroom compared to another home can be equal to an additional $5,000 in my local market. Such adjustments are made in the calculations and require knowledge and expertise in the local market and building costs.

Homes may include special features or upgrades unique for the area. When comparing against older homes, a kitchen that has been recently updated with new cabinets, appliances, and a premium counter-top will certainly add value and sell-ability.  A home may also be in need of repair and adjustments may be needed accordingly.

At this stage, a good real estate professional will usually have enough information to give an approximate valuation to the property. Typically, an agent can give this to you in a report, providing information on what recently-sold properties were used as comparables.

What do you do with your CMA report?

After you know the approximate value of your home, you will then have the information you need to make decisions such as listing it for sale, repairs, and remodeling. Ask your agent whether the market is favorable to selling. A good market to sell in is one in which there is more buyers than sellers, which often leads to multiple-offers and getting top dollar for your home.  It may make sense to list the home, make improvements, or to continue to live in the home as it is. photo-20sm

A CMA report prepared by a Realtor is a valuable piece of information and I’d recommend having one prepared every year.  There is no need to be selling your home in order to request a report. You can request one at anytime. At Brett Wilde Real Estate Team, we will prepare a CMA report for you, and can also send you an updated copy as often as you need. The more you know about your neighborhood and home, the better off you’ll be.  If you have any additional questions, please feel free to call us 801-623-9552.

 

 

 

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