Even if you have no plans to move, as a homeowner, your interest is probably piqued by newsworthy headlines about the housing market. Afterall, your home is a huge investment. And you want to constantly be aware of and familiar with the market in your area. If homes on your block are selling for 50k above asking you might want to jump on the bandwagon. And if so, you need to decide how to proceed – will you hire an agent or do a for sale by owner?
Real estate values are fickle! The current economic climate and supply of homes on the market are the dictating factors at any given moment. And, of course, they are ever-changing. So, if your home’s value is trending high, pay attention because it could mean cashing in and making a profit.
Like all things in life, arming yourself with knowledge and having answers at the ready allows you to pivot with more ease as you navigate life’s changes. In the case of selling real estate, what are steps you can take to figure out the value of your home, and the most effective, cost-saving way to sell?
What is it Worth?
Appraising the value of your house is step one. Just because your neighbors are selling high, will your property follow suit? It depends. It might sell even higher than theirs. For example, if you have a recently renovated high-end kitchen, and your neighbor who had multiple offers and sold higher than asking, has a run-down, outdated kitchen, how much higher should your home’s value be than theirs? Is it a nominal difference or earth shattering? Finding out is an essential first step.
For a ballpark number there are a multitude of online home-value estimators. You enter your address, and you get a number. These are general indicators but can’t and don’t take property-specific upgrades (for example, your new kitchen) into consideration – because they can’t. They use general market information, trends, and comps. They obviously don’t have a camera in your home to see the state of affairs.
Another option is to call a local real estate agent. Agents are always looking to build relationships, leads, and potential business. You can get a CMA (comparative market analysis) for no cost from an agent – specific expertise and market trend analysis of sales in your area are used to ascertain a selling price. The agent does this with the hope of landing a listing with you.
You can also pay a professional appraiser. These professionals are usually licensed, or certified, by your state. The information they provide is trusted by banks. Mortgage lenders use appraisers to provide real estate value on a property prior to issuing a loan. So, you know this is a legit route.
Further, you can conduct more detailed online searches on your own. A county auditor will run residential property assessments for tax purposes. You can see how your property lines up with those abutting it. And to go a little deeper, try accessing the Federal Housing Finance Agency’s site.
Another Word on Home Valuation
With a ballpark home valuation in mind, know there are three main ways in which these valuations were made. Either: fair market value, appraised value or assessed value.
If you used a realtor to conduct a valuation, this is an example of fair market value. It takes into consideration your home’s size, location, neighborhood and uses comps to arrive at a dollar amount. In other words, what did other buyers pay for a home similar to yours in your neighborhood? Likewise, many online tools using your address also produce a fair market value assessment.
If you use an appraiser, this is an appraised value. Again, these professionals work hand in hand with lenders. The appraiser will take into account not only comps, but any specific renovations, additions, or on the other end of the spectrum, property blight, to derive an appraised value of your property.
Lastly, the assessed value is the work of tax auditors. This value is almost always lower than the fair market or assessed value. And is mainly used for your town or city’s grand list. In other words, the assessed value of a property is the way the municipality taxes the property. And this is not a number to use when indicating a potential sale price for a property.
What Are Your Next Steps?
All said and done, once you have the number you believe your property is worth, you can potentially opt to forego using an agent and do a for sale by owner. You might choose to do this once you crunch the numbers and see what the realtor’s commission (traditionally 6% of a sale) adds up to. Which comes out of your pocket! Study up on the ins and outs of home selling before you list, whether with an agent or by yourself.