Notes on How to Find the Value of a Home
(A continuation of How
to Sell a House)
By Steve Gillman - 2008
Now that we have looked at how to find the value of a home
using a basic appraisal or "market analysis" approach,
we will look other clues to value. Appraisal of any sort is an
inexact science. If you can only find houses sold over a year
ago, you should probably estimate appreciation in the area, and
add that. If one sold with seller financing, you have to adjust
for how this affected the price. These complications make it
tough to appraise your own home, so what if you need help?
There are other ways to find out what your house is worth.
You can pay for a professional appraisal. This way you will also
have something to show to prospective buyers who doubt the value.
Be sure to tell the appraiser about anything she might miss,
like a newer roof, or specially imported tiles in the kitchen.
Appraisers don't know or notice everything.
What about online services that tell you what your house is
worth? They don't have enough access to sold prices of homes
around the country to have a program figure the value of your
house. Instead, they usually just take your basic information,
e-mail address, and phone number, and sell this "lead"
to a real estate agent that will contact you.
There is one exception that I know of, and that is www.Zillow.com.
This is a wonderfully useful site. You can zoom in from space
for a satellite view of a town and when you get close enough
you'll see all the recent sales in a neighborhood tagged with
the sales prices. You can use their tools to do your market analysis
for you, too, but I would be careful with automated systems for
this. In any case, this is the best online tool I have seen so
far for calculating value.
Perhaps the cheapest and easiest way to get an idea of what
your home will sell for, is to find a real estate agent, and
ask "How much is my house worth?" Find one who has
sold homes in your area, and ask if she can do a "market
analysis" of your house value. Normally this is free, with
the agent hoping to impress you and get your business. Often,
if the agent has experience and has worked in your neighborhood,
they'll do a better job than an appraiser, and the price is right.
What about other Listings for Sale?
A market analysis often doesn't consider the asking prices
of other houses when trying to find the value of a home. This
makes sense in a way, since someone might ask $184,000 and end
up selling their house for $148,000, right? Obviously what other
homes actually sell for is much more relevant.
This doesn't mean that the asking prices of other homes is
irrelevant, however. After all, they are your current competition.
For example, suppose all the homes in your neighborhood are similar,
and several are for sale for around $150,000. If your home was
appraised at $138,000, this would be a great time to sell, and
even to ask a little more. On the other hand, even if recent
sales put the estimated value of your home at $158,000, those
$150,000 homes may make it tough to get your price.
Houses are never exactly the same of course. If you did your
homework, and the indicated value of your home is $158,000, you
may still do okay listing it at say $163,000, and accepting anything
over $155,000. Just be sure to point out some differences from
the other homes. Advertising things like, "Extra large backyard,"
"Large rear deck," or "All new paint and carpet,"
Now that you have an idea how to find the value of a home,
you have a decision to make. Do you really want to try to sell
it yourself, or should you get help? Read on...
The book continues here: Sell
Your Own Home? - Do it yourself or get help?
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