The Key to Successful Selling or Buying Homes – the Home Value Estimate
The term home value estimate may have different connotations depending upon whether you are the homeowner or the tax appraiser. The term basically means roughly the current price you can get for your house if you put it up for sale. Sometimes it is also referred to as the current market value or home estimate. The best and most accurate way currently to get a steady opinion of value is to have a real estate agent give you an opinion of value. Many real estate agents call an opinion of value a comparative market analysis or CMA. It is truly not your home’s value but an opinion of value, which a real estate agent believes you could get for your house in an open real estate market.
Although many people believe that awareness about a home’s value is necessary for the seller, that is not the case. Yes, homeowners must know about the home value so that they can price the house correctly when putting it up for sale. But it is equally important for a buyer to know that they are paying the right price while purchasing a house. In this article, we have elaborated on the basic elements of a home value estimate.
What is a home value appraisal?
Many people erroneously believe that the value of a house is only impacted by the age of the house, and the value of a house gets depreciated (reducing) with each passing year. The value of a house is affected by a host of factors, so sometimes property owners find it necessary to hire a professional appraiser to help you discover your home value by conducting a thorough examination and come up with a value for the home before you decide to sell or purchase it. Mind you, an appraiser is only giving an opinion of value like a real estate agent does with a comparative market analysis.
The appraisers will first visit your home a carry out a detailed inspection of the current condition of your property. They will then carry out research on the real estate market in your locality. They will come up with an estimate after taking into account other factors such as recent sales of similar homes in your neighborhood, the facilities and amenities available in your locality. The size and age of your house, etc.
What Is The Right Time To Get A Home Value Appraisal
Most people engage the services of a professional home value expert when they decide to sell their house. Many also hire a professional appraiser when they have finalized a house to purchase and want to make an offer for it. Apart from these, you may need an accurate estimate of your home’s value if you intend to apply for a loan and want to mortgage your property. Some get their houses appraised before carrying out home improvements. They do this to ensure that they do not spend more than what they can safely expect to receive if they decide to sell the house in the future.
The main time to get your property appraised is when you are doing a refinance or the buyer is applying for a mortgage to purchase your house. A listing agent might recommend an appraisal to be done when your property is that unique and is very hard to come up with a solid opinion of value because their comparative market analysis does not have enough similar properties sold.
What Are The Common Factors Affecting Home Value?
Normally, most assets tend to lose value (depreciate) from the original price. Cars, electronics, and even jewelry lose value, but housing is one of those assets where this is not always the case. Housing values can appreciate (increase) or depreciate (decrease). Basically, as the land grows scarcer, and the demand keeps rising, it will push up the price of the property. The following are some of the other common factors which impact a home’s value.
- The price at which the house was built or purchased.
- The locality or neighborhood of the house.
- Whether it is a buyer’s or seller’s market at the time of the appraisal.
- Economic factors such as people’s spending capacity or the number of homes available for sale.
- The total area of the house and its surrounding property.
- The exterior and interior condition of the house.
- The age of the house
- The facilities available, such as school system, mass transport, medical services, etc.
How Home Value Impacts Your Insurance Coverage
The insurance coverage that you obtain for your home is based on the assessed value of your home. In many cases, people are unaware of getting their homes appraised at frequent intervals. This lapse, unfortunately, leads to the home being undervalued and the insurance cover being inadequate in case of any loss or damage. Property valuations are constantly in flux. For instance, due to the pandemic, many families relocated to suburban areas from big cities, as they were able to work remotely. This shift pushed up the prices of homes in such areas. That is why it is vital to always be aware of the actual cash value of your home. This will ensure that you have accurate insurance coverage for your asset. Remember there are different ways to cover one. Some are based on market value while others are based on construction costs. Both can change, so always be away from both valuation models.
How Your Property Taxes Are Affected By Your Home Value?
Similar to insurance coverage, when it comes to computing the annual property taxes, your home’s assessed value is of importance. The home and property tax laws differ from state to state, but they are mainly based on the assessment of the sale prices of similar properties in your neighborhood. But as the real estate market undergoes changes so does the value of your home. Therefore it is crucial that you check your home’s value annually. This awareness will ensure that you are paying the right amount of taxes and are not overtaxed. Your taxation value can be different than your market value.
How The Home Value Impacts Home Improvement Plans?
Before putting up your home for sale, many homeowners decide to embark on a home improvement project. They do this to increase their property value and thereby get a good price for their house. A common mistake is overspending on home modifications, and then not getting the right buyers or the right offer price. You should talk with a very skilled and well-experienced real estate agent for ideas prior to doing anything. In different markets, there are different things you should or should not do.
There are two kinds of improvements or redecoration that most homeowners attempt.
Short Term/Low-cost Modifications
These simple, low-cost, and quick modifications are meant to give a new look to the house. These are mainly superficial or aesthetic changes. We recommend speaking with a skilled real estate agent when it comes to figuring out what to do to your house to help increase its market value.
- Freshly painted rooms.
- Clean and well-maintained landscape.
- New kitchen cabinets.
- Roof and siding upgrades.
- New or serviced HVAC system.
Long Term/High-cost Modifications
These are major changes or remodeling carried out to enhance the value of the property. It generally requires structural changes or large-scale building and renovation. These changes will increase the home’s value to the levels of similarly equipped homes. A skilled real estate agent who knows the local real estate market will be able to suggest great ideas to increase the market value of your house.
- Constructing additional bedrooms.
- Putting in extra bathrooms.
- Improved basement.
- Building a big garage
- Renovation of the entire kitchen.
Whichever method of value enhancement an owner prefers it is a must to have a clear idea about the true valuation of the house. No matter how much the owner spends in modifying the house, the truth remains that the offer price will be dependent on the actual value. These additions can certainly increase the value by a few points but not bring about a drastic change.
The value of a home will change based on its condition and upgrades done to it. You will need to know if it is a buyer’s market or a seller’s market to get a good idea of what a buyer is willing to pay for a house. The current market condition is very important to know when you are deciding what needs to be done to increase your home’s value.
Your home’s value has multiple answers for multiple sources. We have discovered that most people are looking for their home’s value for pricing it right to sell it. This group is wanting to know what their home is worth. A common mistake is to believe it is as simple as a square footage equation. The fact it is a multiple equation formulation and part of it is based on the square footage to get a value of a home. You will want to look at what the other homes look like in your community. The overall condition is it is like brand new or run down. Then the upgrades do it have a pool, a golf course lot, a basement, granite countertops, three-car garage, etc. It could have the same square footage but have all of the items I just listed and your property does not, so you would have a different value. Then it simply comes down to supply and demand, and what a buyer is willing to pay for it.