Your neighbor's sale price influences your home's value.
The estimated value of a house is what a ready, willing and able buyer might pay for the property in the current market. It is not a guarantee that the house will actually sell for that amount. Because of market conditions and other factors, home values fluctuate, and what a house is worth one year may be drastically different the next.
Professionals
Lenders and homeowners seek the services of real estate professionals for estimating home values. Three ways to determine estimated value include the appraisal, broker's buyer opinion (BPO) and comparative market analysis (CMA). Each uses a similar process to estimate the value. The appraisal, prepared by a licensed appraiser is the most comprehensive and expensive of the three. Lenders typically require an appraisal when deciding on funding a home loan. The licensed real estate broker prepares the BPO for a fee. Common uses for BPO include the attorney or bank determining value for an estate or foreclosure. Licensed real estate agents prepare free CMAs for potential listing clients.
Evaluation Methods
There are three common methods used by professionals when determining real estate values. They include the sales comparison, the cost approach and the income approach. The sales approach, which involves using recent sales figures from comparable properties, is the common method for estimating house values. The cost approached is appropriate for unusual properties, where a comparable property is not available. This takes into consideration the cost of land and replacement of the structure, with depreciation. The income approach is suitable for income-producing property, as opposed to homes.
Process
The process for estimating the value of a house using the sales comparison involves locating comparable properties which sold in the recent history, ideally within the last six months or less. For an accurate comparison, the comparable is located in the same neighborhood as the subject property, or in a nearby similar neighborhood. Homeowners have a more difficult time locating comparables, as they typically don't have access to accurate databases listing recent sold properties. Adjustments to the sold prices compensate for physical differences between the subject and comparable property. An average of the adjusted sold prices determines the estimated value.
Factors
When selecting comparables, the estimator considers extenuating circumstances of the properties. For example, when evaluating a home in a neighborhood where most of the similar houses sold for an average of $200,000, yet one sold for $50,000, the estimator may discover that that transaction was from one family member to another, at a discount. It does not accurately reflect the property values in the neighborhood. Estimators or appraisers might discard the high and low sold prices, and then total and average the sold prices for an estimated value.
Related posts
Your parents' home may be lovely, but that does not mean you have to live in it. If you inherit the home of your parents, you can keep the memories it holds, but sell it if you do not plan to live...
Selling a home in any kind of economy can be challenging, and if you find yourself in a hurry to sell your home you have added more pressure to the situation. When you need to price your home for...
Buying a new carpet can increase the value of a house.Improving a home is important for your own comfort and convenience and especially important when you're trying to sell the home. Home improvem...
Update, Replace and Beautify.Before putting your mobile home on the market, take time to update it to attract the highest possible dollar amount. Increasing the value of your mobile home for re-sa...
You can sell your house in Washington state on your own.People can and do sell their homes in Washington without listing them with real estate brokerages. No special permits or licenses are necess...
