How Much is My House Worth? What Every Homeowner Needs to Know

Services for Real Estate Pros with Peter Mark
How to get an accurate home value
Maybe you are considering selling your home, looking to see how much equity you have, or just want to know your home's value? It's good to know your home value in today's market and to keep tabs on it every once in a while. Who knows, you might be surprised? But what is the most reliable way to arrive at this value? After all, it's your most valued asset. One thing is for sure, in today's tech savvy, instant estimates, social state of mind, quick answers from popular websites and computerized methods can steer you way off course. This is the wrong way to go in establishing the market value for your most valued asset. Having sold homes in both Illinois, South Carolina and Florida markets I can tell you some facts of what I learned in my real estate career before getting into SEO. The answer to getting a true home value is worth is really two-fold. Because real estate is local and each local market is unique. Local as in a mile radius or smaller in some markets depending on the home. A local experienced Realtor will be about 95-99.99% accurate in providing you estimated market value. Get more than one Realtor to give you a Comparative Market Analysis and you will get a better picture overall! That local Realtor is a valuable resource when it comes to recent home sales. Furthermore, Realtors are usually very active in their local community. They truly have a pulse on the local market and you can get an accurate estimated market value for your home very quick and at no cost as well.

How to Estimate Your Home's Value The Wrong Way

how much is my house worth today
Here is a typical scenario for home sellers. "Honey look, they just listed their house for $300,000 can you believe that?What? Well if their house is listed for $300K and ours is bigger, our home must be worth $450K." This is how many people I see place the value of their home in the market place. Over and over again. But when it comes down to it at closing time in a real estate transaction, it is the buyer that determines the value, in any marketplace. At least this is what I have known from my experience in real estate. Has the market changed?  Maybe we can  get some input from local Realtors on this article below. I know that when I had a home to sell for a seller client and if it was not selling or getting offers; the problem was always the price. One agent I worked with Leo Silverman said usually the first offer you get is usually the best and you should take it and negotiate on other things to close the sale. I had to disagree with him on that one but I soon learned that at that time when I was active in real estate he was right. The best explanation of of buyer determines home value concept is from a guy I know named Phil Pustejovsky. Phil is an investor, mentor and coach in the real estate field. In his youtube video titled "Determining Property Value the Right Way" he says that a lot of homeowners, real estate investors and even builders get this wrong. I will share with you where the confusion comes from and then how to get clarity. Keep in mind there are many factors involved when trying to find out the value in any home. You have the location, condition, age, neighborhood, current inventory of homes for sale, current buyer demand and many more factors to consider. This is why I stress if you are any bit curious in your home's true value to get with a local Realtor. Trust me on this one. 

3 Main Components of a Accurate House Value

home value analysis up close
#1 How is Real Estate Valued?
This is actually simple because you already do it. I hate to use this analogy for your most valued asset but let's look at the iPhone. Picture buying an iPhone on eBay before you would buy that smartphone wouldn't you try to look and see what other iPhone's were selling for? Identical to the one you want to buy right? If you go to a grocery store and you want to buy bread, you can try to compare which one is the best deal. You are looking at different breads to try to compare which one to buy. This process of looking at comparable sales is how you compare most items you buy. Figure out if it's a good deal or if it's overpriced. Real Estate is the same way. When looking at comparable properties you should look at what they sold for in comparison to the property that you want to know the value of.  Hence I mention the word sold not listed. This is a big difference. The closer a home is to the selling price the faster it will sell. That's how you figure out what the value is. It's really that simple. If it's so easy how come many people get it wrong? There are two main reasons when that happens. The first is where they're getting their information from.
#2 Where is the information coming from?
There's two places where home values actually come from. The first one is county records. County records is what can cause a lot of confusion. In every county in America what you have is you have different departments. Two of the departments that we deal with for county records is going to be the tax assessor's office as well as the recorders office or the Register of Deeds. The Register of Deeds is the group that records deeds and other such documents. These records can tell you information such as what the property was, what liens are on the property, who the owner is and how long they've been the owner when that deed was recorded. Some areas the county records and the recorders office has sales information but not all of them. Now this is where it gets a little iffy. Some states are non disclosure states like Texas whereby they are not required to disclose the sales price on the deed that gets recorded. In other areas it is disclosed so they will show it. So states like Tennessee which is a disclosure state they always have a line on the deed where you're supposed to put in the sales price. There are other states that are called strict non-disclosure states like New Mexico where there is no requirement for a sales price on the deed. South Carolina, South Dakota, North Dakota, North Carolina, Rhode Island and West Virginia do provide this data from my searches into local real estate sales. So as you can see certain states reveal sales prices at the recorders office level and some don't and that can be a huge hornet's nest. So how can you get reliable information? Keep reading for the answer.
how much is my house worth assessor
The second is the tax assessor's office. Now the tax assessor, their job is to figure out the relative value of each property in their County so they can tax it. They can tax it as a percentage of the value as long as they know what type of property it is. Say if it's a duplex which could be commercial versus a single-family home. So Tax Assessors are putting a tax appraisal on every single property. So some look at that and say, oh the tax appraisal that must be a good source. No way! Let me tell you what happens to tax appraisals. The first thing is most homeowners are not willing to share every bit of news with Tax Assessors. If they add 900 square feet in the form of an extra bedroom and bathroom, they may not tell the tax assessor. Why? So they can keep their tax assessment lower and pay less in taxes. In certain states there are homesteads and other kinds of policies which as you own the property you can elect that the tax appraisal can only go by up by a certain amount each year as a maximum. What happens is over the course of many years that tax appraisal can lag way behind the actual current real value. So tax appraisals can be way off. Also the tax assessor is supposed to put the number of bedrooms, bathrooms, square footage as part of their assessment. But they get that wrong many times because they only get access inside a property less than half the time. Like I mentioned before, most property owners try to push down how many bedrooms and bathrooms they have because it'll reduce their overall tax appraisal. County Recorder's offices with both the recorders to the Register of Deeds and then the tax assessor, these two you know comprise county records and county records can be way off. If they're way off in home values, where can you get the best the information for how to get an accurate fair market value? Not Zillow! This is how Zillow works using their algorithms, property valuation tool and gives you only an estimate which is very misleading. Your home is your most valued asset as well as your home equity. These quick 2 minute online estimates are not accurate, regardless which website you are using.
#3 Who is making the comparison?
Who is comparing? In this day and age there's a lot of people that love computers. Computers can do a lot of great things. They can calculate very efficiently, very consistently when it comes to massive number crunching. Take, for instance an online mortgage calculator, affordability calculator or refinance calculators. These are great tools you can use with amortization tables so accurate down to the penny. But computers don't see the bigger picture. Computers don't know when they have been programmed with a bug. That bug being wrong assessor data, wrong recorded sales data and so on. There are too many variables you need to verify if you want to properly assess home value correctly. They don't know how to look outside themselves and say hey there's a bug. They can't tell if the numbers look wrong after they've calculated something. So what happens is we have a lot of people who want computers to make decisions for them? When technically the best role of a computer is to help you be more informed so you can make great decisions. Humans are not computers. We have this wonderful ability to do all sorts of things that at this point especially in the real-estate investing world, technology is not available yet to to duplicate the human brain. What happens when Zillow or another site instantly estimates your home's value? You know they've made a lot of headway with their technology. They're doing better all the time even with their mobile app. But they have massive weaknesses. One of those weaknesses is they're drawing all their information from the county records. Tax assessors information as mentioned before could all be wrong. Not only are they using that information but when trying to figure out which properties are comparable, they're doing a circle around the property say a two mile radius. But you and I both know that every part of the US there are pockets where if you go two miles apart they're completely different worlds. A 2,000 square foot exact type home in north San Francisco compared to the south side might be 30% off. 

The Local MLS - The Crucial Key Component

mls data for accurate fair market value
The MLS is the Multiple Listing Service. MLS data is controlled by the Realtors. More specifically each MLS is independently owned and there can be more than one in the same geographic area. Remember my statement from earlier about Real Estate being local?  Each MLS is actually localized and independently owned as it should be. Because Real Estate is very much a local market. It is the information put in there by real estate agents. The great thing about the MLS is that real estate agents have this natural checks and balances system. So that insures that the listing information of each property is accurate. Here's how it works. Let's say you're a listing agent. You list a property up for sale and input it in the local MLS. If you put in the wrong bedrooms, wrong bathroom count, wrong square footage, wrong anything, someone will find out and then that listing agent will either have to make the changes or get a fine from the MLS. So what happens is you have this natural checks and balances. This accountability system with the MLS so the data is just flat good and accurate. This is why I highly advise you contact a local Realtor when trying to establish a true value of your home. In fact get 3 of them to give you a comparable market analysis. It's real great how the MLS has other features that are wonderful. It will tell you not only the exact sales price that occurred but also if there are seller concessions. Get this from your Realtor. You can see in many cases if the seller paid for closing costs and that sort of thing. Because that really does play a role in the overall sales price. So the MLS is where the data needs to come from in order to make these accurate comparisons. But the MLS does have a couple of drawbacks. It doesn't tell you what liens are on the property and it doesn't tell you who the owner is. That's where the county recorders office can help you. So a home seller who wants to truly understand their property value is going to use the best data. By combining county records and the MLS data can get you in the right direction. But even if you have the right information, you can still completely screw up determining property values.

Your Home's Value is closely related to Location, Location, Location

home appraisal using location
Locations play a big role in real estate.You can go from absolute the nicest part of town to complete foreclosure run down neighborhoods within two miles. But the computer doesn't know that. Zillow, Trulia and the like, they're all getting their data from the recorders of the county records and they don't really have a good way to be able to match up neighborhoods properly. These home value estimator tools that blow out data like a toupee on a windy day, are not reliable. For example, what if you get a bunch of new subdivisions interspersed with some really old subdivisions? Well you don't want to compare those brand-new homes with those super old homes. It's just not even a comparison. What if there is a brand new built home being dropped in the same neighborhood in a older neighborhood? So the computer can't be the comparing mechanism. The computer can't be the one to choose which are comparables. True comparable homes is what you're looking for. That's what the MLS provides, real true comparables. So again, let's go back to our iPhone example. If you're trying to figure out if the iPhone is a good deal or not, you need to look at the identical iPhones that you're looking to buy and be able to compare what those sales were. There are iPhones with different storage capacities for one. So getting that apples to apples comparison in real estate you need to find accurate comparable sales. Computers just can't do this. I mean Zillow and Trulia they can be an absolute disaster on values when it comes to their home value estimator. The only real estimator to use is for mortgage rates like a mortgage calculator or when you are calculating your credit card payment.  A good affordability calculator is highly accurate. But no calculator will give you a home value.
home value calculator
This can actually work for you and against you depending on if you're selling or buying and how zillow spews out their data. It is a bad idea to use sites like this because all of these systems are all using the same bad data. They're also using the same bad circle radius comparables. So they're all giving you numbers that are all bad really and that's the best way to describe it. What you want to do differently in getting property values is you want to get access to the MLS with your local Realtor. Home selling is their life. Then what you'll do is you're ging to think as if you were buying an iPhone. If you're buying bread at the grocery store get the most comparable properties. Picture you were going to buy that property and start to look at the comparable's. How do they compare with the subject property that you want know the value of? If this home that sold for  $300,000 was one of the comparable's why was that one $300K and the other one$275K ? What made it different? Did the first one have more square footage or an extra bedroom? You don't have to be scientific about it. Who determines what homes sell for? The people buying the people making offers. That's why you don't need to be scientific in many ways when it comes to understanding when you compare these comparables together. Instead you want to just look at them all. Then start to determine a range of what is really going to sell for in the real world. That's how you determine property values. You already have the skill you just need to get access to the right information and make sure that you're doing the choosing of the comps not computers. If you do get lucky and then Zillow actually calculates correctly in your area from time to time, great but don't rely on it! You need to know on every deal as a home seller exactly what the value is and not to be off. Whether you have student loans in the family, or just want to know your home equity, contact a local Realtor for recent home sales or comment below. Realtors can also tell if a home closed with any type of fha loans.
Final Note on Mortgages, Financing and Home Equity
 Whether you want to know what your home equity line is for a home quity loan, HELOC or refinance, I want to recommend Larry Lovetere Sr. Loan Officer with Oak Leaf Community Mortgage. You may reach Larry directly at 630-306-5060.  Larry is the go to guy with a personal touch and will provide you with the best service.   Tell him Peter Mark sent you!  I have worked with Larry for over 10 years, so he can handle any loan you need, regardless of your location. The only state Larry can't lend in is New York, Alabama, Idaho, and Hawaii. 
Larry LoVetere specializes in first time home buyer loans, fha loans, va loans, loan options, amortization calculator, debt consolidation. 
Larry can run your credit score and provide you with the best mortgage rates! The best part is you can see a amortization calculator with loan options to suit your needs. Using your home equity to pay off student loans and that credit card is the way to go. Your credit score is closely related to home equity line, check on refinance rates, equity line of credit.  You home value can offset any debt consolidation with a balance transfer. Thanks for reading and I hope it helps you understand how to best attain a true home value.

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Fred Griffin 02/18/2018 05:03 PM
Home Selling
home value estimator

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Raymond Denton
Academy Mortgage Corporation - Irvine, CA
Simple Man

Wow - that was a lot of information, Peter.  Welcome aboard to activerain!

Feb 18, 2018 09:36 AM #1
Erika Rae Albert, Austin Real Estate Expert
E*Rae Real Estate Group- Powered by eXp Realty LLC - Austin, TX
Exceeding Expectations in Every Transaction

Very thorough Raymond!  I feel like this is a lot to digest for the average home seller.  You've made great points in regards to the cons of computerized systems, I love your analogy to buying an iphone, and you really hit home the point that you need a REALTOR or two do a thorough analysis.  Also, in order for an agent to give the best estimate they need to get inside the home.  I did notice a few typos throughout as well, so you may want to edit those.

Feb 18, 2018 01:58 PM #2
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Hi Peter Mark, this is great information for all home sellers. Welcome to ActiveRain! 

Feb 19, 2018 12:33 PM #3
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Now that is the way to write an epic post, as Debbie Gartner says to do one a month.  I am impressed. 

Mar 09, 2018 09:49 AM #4
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