Are you considering selling your home, looking to see how much equity you have, or just want to know how much is my house worth in today's market? It's good to know your home value and to keep tabs on it every once in a while. After all, it's your most valued asset. Who knows, you might be surprised. But what is the most reliable way to arrive at the correct value? 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 and are the wrong way to go in establishing proper home value.
Having sold properties in both Illinois, South Carolina, and Florida markets, I know the inside scoop for getting any home value in any housing market. Because real estate is local, as in a mile radius or smaller in some markets, and each local housing market is unique, you need a local, experienced Realtor®, who will be able to provide you an estimated house value with about 95-99.99% accuracy. Get more than one Realtor® to give you a CMA and you will get an even better picture!
That local Realtor® is a valuable resource when it comes to recent home sales. Furthermore, Realtors® are usually very active in their local communities. They truly have a pulse on the local market and you can get an accurate \value very quickly and at no cost. Property value's are in their blood you could say.
How do I find the value of my home? Comparative Market Analysis
Answer: Get 2-3 local real Realtors® to provide you a CMA. A CMA stands for comparable market analysis. In this report what you will get is the most recent sales that represent similar like homes that most recently sold. The agents providing this report for you will compare your home's square footage, features, condition to that of those recently sold in your area. Then they usually add or deduct value based on those comparable properties to give you a home value to list at. If the recent sales of similar homes sold all had less square footage that your home then they will add to your value.
Here is a typical scenario for home sellers. "Honey, look, our neighbors just listed their house for $300,000. Can you believe that?" "Well, if their house listed for $300,000 and ours is bigger, our home is worth $450,000." Over and over again, this is how many people I see the place the value of their house in the marketplace. But in a real estate transaction, as in any marketplace, it is the buyer that determines the actual property value.
Has the market changed? I know that when I had a property to sell for a client, and if it was not selling or getting offers, the problem was always the price. One agent I worked with, Leo Silverman, said that the first offer you get is usually the best and you should take it, and then negotiate on other things to close the sale. I was uncertain at first, but I soon learned that he was right.
When it comes to home values, a lot of homeowners, investors, and sellers get it wrong. I will share with you where the confusion comes from and how to get clarity. So you can find out exactly how much your home is worth today! Keep in mind there are many factors involved when trying to find your true home value.
Ask a Real Estate Agent, What's My Property Worth?
5 Factors That Determine House Value
Age and Condition
Amenities and Upgrades
Local Market Conditions
You have to consider the location, condition, age, neighborhood, current inventory of homes for sale, current buyer demand, and many more factors. The complexity of this task is why I stress that if you are at all curious about how much a certain property is valued, to get with a local Realtor®.
3 Main Questions to Find Out How to Get Accurate Home Value Estimate
#1 How is real estate valued?
I hate to use this analogy for valuations, but let's look at the iPhone. Picture buying an iPhone on eBay. Before buying it, wouldn't you look and see what other, identical iPhone's were selling for? If you go to a grocery store to buy bread, you compare which one is the best deal. This process of looking at comparable sales is how you figure out if it's a good deal, or if it's overpriced.
#2 Who is making the comparison?
Computers can calculate efficiently and consistently when it comes to massive number crunching. Take for instance an online mortgage calculator, affordability calculator, or refinance calculators. These are great tools to use with amortization tables that will be accurate down to the penny. But computers don't see the bigger picture, and they need people to find home sales data and input it into the system.
#3 Where is the information coming from?
The primary source for home sales is the county records. But county records can cause a lot of confusion because every county in America has different departments. Two of the departments that we deal with for county records are the Tax Assessor's Office as well as the Recorder’s 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 figures such as what the property is, what liens are on the property, who the owner is and how long they've been the owner when that deed was recorded. In some areas the county records and the Recorder’s Office also have sales information, but not in other areas. This is where it gets a little iffy on doing property valuations. Some states are non-disclosure states, like Texas, where 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 are a disclosure state, always have a line on the deed where you're supposed to put in the sales price. There are other states that are strict non-disclosure states, like New Mexico, where there is no requirement for a sales price on the deed. From my searches into local pproperty values, I found that South Carolina, South Dakota, North Dakota, North Carolina, Rhode Island, and West Virginia do provide this data. So as you can see, certain states reveal sales prices at the Recorder’s Office level and some don't. This can be a huge hornet's nest for a properties evaluation. So how can you get reliable sales figures? Keep reading for the answer.
How Home Appraisals Work
The second source of information 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 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 dwelling. Since Tax Assessors are putting a tax appraisal on every single property valuation, some look at that and say, "Oh, the tax appraisal must be a good source."
- Drive-By Appraisal
- Is Appraisal for Refinance of Purchase?
- Who ordered the Appraisal?
- Foreclosures Affecting Appraisal
Not only can tax appraisals be way off, but also the number of bedrooms, bathrooms, and square footage can be wrong because the Tax Assessor can only get access inside a property less than half the time. Like I mentioned before, most property owners try to hide how many bedrooms and bathrooms they have because it'll reduce their overall tax appraisal. But this is critical in determining value.
If the County Recorder's Office — the Register of Deeds and the Tax Assessor — are off in appraisal because of inaccurate records, where can you get the best sales figures for how to get accurate and fair market value? Not Zillow! Zillow works by using their algorithms and their property valuation tool to give you an estimate which can be very misleading. Your home, as well as your home equity, is your most valued asset. These 2 minute online estimates are not accurate, regardless of which website you use.
Home Value Estimator Comps from Local Agents
The MLS is the Multiple Listing Service, which is controlled by the Realtors® who put the sales facts and figures into it. More specifically, each MLS is independently owned and there can be more than once in the same geographic area. Remember my statement from earlier about real estate being local? Each MLS is localized and independently owned, as it should be because it is very much a local market.
The great thing about the MLS is that local agents have natural checks and balances system, which ensures that the facts about each property valuation is accurate. Here's how it works. Let's say you're a listing agent, and you list a property 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. Then, you would either have to make the changes or get a fine from the MLS. This accountability system provides natural checks and balances within the MLS, so the data is both good and accurate when it comes to sales price history.
Best 8 Factors to Use for any Home's CMA Evaluation
- Square Footage
- Closing Date
- # of Bedrooms
- # of Bathrooms
- How much older is Comparable
- Lot Size
The MLS is where the data needs to come from to make these accurate comparisons, but it does have a couple of drawbacks. The MLS 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 Recorder's Office can help you. By combining county records and the MLS data you can get in the right direction to truly understand your property value.
Best Home Estimator - Real Estate is all about Location, Location, Location
Locations play a big role in home values. You can go from the absolute nicest part of town to completely run-down neighborhoods, all within two miles. But the computer doesn't know that. Zillow, Trulia, and the like, are all getting their data from county records, and they don't really have a good way to match up neighborhoods properly. These 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 not even a comparison. If you have any questions regarding eppraisal, property value or valuation, email me at firstname.lastname@example.org .