One of my favorite TV shows on HGTV is "My House is Worth What?". In this show there are three separate homeowners all over the country. Many of these families have done some major renovating and remodeling and want to know if their time and efforts were worth the money. As I was watching this show I started thinking...many homeowners put TONS of money into their home thinking that they'll be able to recapture all of it once they decide to sell.
As I go to several listing appointments I need to remind these homeowners that the value of their home IS NOT:
•· How much money they have put into the house;
•· How much the neighbor down the street sold his/her house for;
•· What some website said your house is worth (my favorite J );
•· What you need to net in order to buy another house;
•· What the Tax Assessor's Office says your house is worth;
•· And sadly, neither is sentimental value.
So how do we derive "Market Value"? The first thing that is done is to check the "comps" or the comparable properties that have sold within the last six months (or even up to a year if there are not enough comps). From the comps, choose houses that are within 20% of the same square footage, either smaller or larger. This will give you an idea, or range, of what the price per square footage is.
This gives you a baseline. Of course, adjustments must be made if your house has an unbelievable view that the Comp properties DO NOT have; if your house is the only one with a swimming pool, and you have upgraded your house by putting in hardwood floors and granite counter tops.
So what adjustments should be done? This is what I was given by an appraisal.
•1. View lots can range from $0-$40,000 depending upon the type of view and also the location of the property.
•2. Lot size range from $.25 per square foot - $1.50 per square foot. This could also depend upon location.
•3. Age adjustments are usually given for houses that differentiate by 5 years or more. This could be from ¼% to 1% per year.
•4. Upgrades done to a house such as hardwood flooring, granite counter tops, upgraded lighting and plumbing fixtures, clay tile roofing, wood shutters, etc can range from $1000-$6000.
•5. Swimming pools range from $0 - $15,000 (but not more!).
•6. Fireplaces $500 - $2000
•7. Bathrooms $2000 - $5000
•8. Garages from $1000 - $3000 per garage
•9. Surround Sound $500 - $1500
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