Buying Your Home - Appraisals & Market Value
What is the return on new versus previously owned homes?
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
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
What standards do appraisers use to estimate
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).
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
What is the difference between list price, sales price and
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
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
What is the difference between market value and appraised
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."