It’s not always easy, but it’s never that complicated.
If you read the title of this post and think to yourself, “no kidding”, don’t stop reading yet. While it may seem obvious to you, it isn’t that obvious to everyone. I have to point the finger at my own industry a bit because I’ve heard from more than just a couple of home sellers recently who sat across their kitchen table from an agent who had a print-out from the tax records and pointed to the assessed value of their home. Their point was to say, your home isn’t worth what you think it is. If someone is telling you your home is worth what the tax assessor says it’s worth….call me.
The Art of Valuing Your Home
There are five people who set “values” for any particular home. The Seller, Buyer, Agent, Tax Man and Appraiser. In a perfect world those numbers are all close together, but in reality the seldom are. And it’s no surprise that a home seller is going to value their home higher than a potential buyer. What’s just as important as the actual value placed on the home is the valuation process the person valuing your home used.
If you live in a large community of similar homes and there have been many recent sales, then that process is very easy. But this market has caused many home owners who might have moved to wait until they feel things have improved or until they are in a “have to move” situation. Consequently, it’s not uncommon to have a community where no homes have sold in the past 12 months. Or, all homes that have sold have been on slabs and now you want to put your home with a basement on the market. That leaves you in a spot where there may be NO comparable sales in your immediate community.
There are several ways to approach that. And you will need to look at sales comparables outside your community, which is something banks making loans don’t like to do. You may have to use a very old sale comparable and then adjust it down for market conditions for instance. Square footage should be taken into consideration as well as lot, community, schools, etc. Some of these things are very subjective and difficult to put a hard number on. For instance, how much more is a home worth if it’s on a community lake as opposed to an interior lot? How much less is a home worth if it’s on a busy road?
The Bottom Line
At the end of the day (or end of the listing presentation), there are 4 questions you should be able to ask yourself and be comfortable with:
1. Did they miss anything on your property? (beds / baths / sq. ft.) This must all be correct.
2. Do you understand exactly how they came up with the price? Is their method clear and understandable?
3. Does their method make sense, even if you don’t like the number?
4. Is their number vastly different from another persons evaluation? (Get more than one opinion). If it is different, ask both parties why.
It’s a challenging market with many unknowns but we don’t have to approach it with a “let’s see what sticks” mentality. If you want to know what you’re home is worth, just ask. info@thenorthgroup.com
Tags: Appraisals
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