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Buying Your Home - Appraisals & Market Value

What is the return on new versus previously owned homes?
Buying into a new-home community may seem riskier than purchasing a house in an established neighborhood, but any increase in home value depends upon the same factors: quality of the neighborhood, growth in the local housing market and the state of the overall economy.  One survey by the National Association of Realtors shows that resale homes do have an edge over new homes. The trade group's figures show the median price of resale homes increased 4.3 percent between 1999 and 2000, compared to only 2.8 percent for new homes in the same period.

What's a house worth?
A home ultimately is worth what someone will pay for it. Everything else is an estimate of value. To determine a property's value, most people turn to either an appraisal or a comparative market analysis.   An appraisal is a certified appraiser's estimate of the value of a home at a given point in time. Appraisers consider square footage of structures on the property, construction quality, design, floor plan, overall value of the neighborhood, and availability of transportation, shopping, schools, jobs, etc.  Appraisers also take lot-size, topography, view and landscaping into account.  Most appraisals cost about $450-500 nowadays.  A comparative market analysis is a real estate broker's or agent's informal estimate of a home's market value, based on sales of comparable homes in a neighborhood.  Most agents will give you a comparative market analysis for free.  You can do your own cost comparison by looking up recent sales of comparable properties in public records. These records are available at local recorder or tax  assessor offices, or local County appraisal districts, or through private real estate tax preparation companies, or the Internet.

What standards do appraisers use to estimate value?
Appraisers use several factors when estimating a home's value, including the home's size and square footage, the condition of the home and neighborhood, comparable local sales, replacements costs, and any pertinent historical information, sales performance and indices that may forecast future value. For detailed information on appraisal standards, contact the Appraisal Institute at 200 W. Madison, Suite 1500, Chicago, IL 60606, 7 a.m. - 5 p.m. CT; 888-7JOINAI (756-4624).

Can I find out the value of my home through the Internet?
You can get some idea of your home's value by searching the Internet. A number of Web sites and services crunch the numbers from historic public records of home sales to produce the statistics. Some services offer an actual estimate of value based on acceptable software appraisal standards. They also depend on historic home sales records to calculate the estimate. Neither of these services produce official appraisals. They also don't factor in market nuances or other issues a certified appraiser or real estate professional might in assessing the value of your home.

What is the difference between list price, sales price and appraised value?
The list price is a seller's advertised price, a figure that usually is only a rough estimate of what the seller wants to get. Sellers can price high, low or close to what they hope to get. To judge whether the list price is a fair one, be sure to consult comparable sales prices in the area. The sales price is the amount of money you as a buyer would pay for a property. The appraisal value is a certified appraiser's estimate of the worth of a property, and is based on comparable sales, the condition of the property, replacement costs, and numerous other factors.  Whereas list price and appraised values are relative, the only proof in the pudding as to what a home is REALLY worth is the Sales Price: What a Willing Buyer & a Willing Seller agree upon in the sale of a given property.  Whether buyer or selling, it is wise for a consumer to consult a Realtor to get a full CMA, or Comparative Market Value, of the home's estimated value, based on current market statistics provided in the local MLS.

What are the standard ways of finding out how much a home is worth?
A comparative market analysis and an appraisal are the standard methods for determining a home's value.  As your real estate broker, I will be happy to do a free comparative market analysis on your home~ an informal estimate of value based on comparable sales in your Subdivision.  Besides studying the Sold Prices, it is important for the CMA to include current List Prices, as well as those that are in Option Period, Pending, Withdrawn, Terminated, & Expired Status, because they may indicated trends, of upward or downward value in the Subdivision.  When comparing Sold Prices, I always study the homes, comparing the many various features in each. You also can research this yourself by checking on recent sales in public records, or reviewing the pertinent MLS information, which I always provide my clients.  If you are doing it yourself, be sure you are researching properties that are similar in size, construction and location (i.e., try to use data within the same Subdivision, which is the most accurate in doing a comparison.) Such information may be available at your local recorder's or assessor's office, as well as through private companies, or on the Internet. An appraisal, which generally costs $450-500 nowadays, is a certified appraiser's opinion of the value of a home at any given time. Appraisers review numerous factors including recent comparable sales, location, square footage, construction quality, and replacement costs.  But the most effective way of determining what your home is worth on the current market is through a Realtor who has the most current MLS data and can compare the many details of the properties in a given Subdivision, to help a Seller arrive at Price-Range or satisfactory List Price.

How do you determine the value of a troubled property?
Buyers considering a foreclosure property should obtain as much information as possible from the lender, including the range of bids expected. It also is important to examine the property in a scheduled Showing. If you are unable to physically view a foreclosure property, check with surrounding neighbors about the property's condition and whereabouts, such as inquiring about flooding that may have occurred. It also is possible to do your own cost comparison through researching comparable properties recorded at the local county recorder's and assessor's offices, or through Internet sites specializing in property records.

What is the difference between market value and appraised value?
The appraised value of a house is a certified appraiser's opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees generally range from $450 to $500.  Market value is what price the house will bring in a Sale.  A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a licensed real estate agent or broker. Either an appraisal or a comparative market analysis (known as a CMA) is the most accurate way to determine what your home is worth.  But the real test of value is what the home actually sells for~ i.e., the old Real Estate Definition of "What a Home is Worth?" is simply "What a Willing Buyer and a Willing Seller agree upon at a given point in time."  

Lois Myers and Rich Myers
Lois Myers and Rich Myers
Broker and Sales Agent
9701 Westview Dr Houston TX 77055