Most people know or can easily find out the balance in their checking, savings or investment accounts. But few people know how to determine the value of what may be their single largest asset, their homes. The most common reason to assess a home’s value is to price it for sale. You may also want to know the value for insurance or tax purposes or to get a home equity loan.
Different kinds of appraisals yield different results.
- Free on-line appraisal services take a random sample of sales in the area and use a statistical analysis to estimate value. Sales data used by on-line appraisals can be out of sync with market conditions. Moreover, with an on-line appraisal, no one ever actually looked at the property.
- Read newspaper listings to see what the sales price is for homes of similar size in your neighborhood. But beware that sales listings represent the seller’s idea of what a house is worth and can often times be inflated.
- Review the assessed value of your home on municipal tax rolls. In most cities you can look your address up online on the appraisal district website, which can also provide access to compare your home’s value to others in your neighborhood. But beware that tax assessments reflect only a percentage of actual market value and a house’s value may have increased since its last assessment. While knowing your assessed value may not be helpful in determining a sales price, it could reveal that your house is over-assessed by the taxing authority. If this is the case, contact your local tax authority and find out how to appeal the assessment and lower your tax liability.
- Consult a real estate agent. A local real estate agent should be able to provide you a “comparative market analysis”. The agent will list a number of recent sales in your area that would be similar sales or “comparables” of your home. This is a good way to estimate the current value of your home.
- Hire an appraiser. This is the best way to get an accurate, up-to-date assessment of your homes value. The cost is about $300. There are a number of situations where an appraiser would need to be hired such as when a property must be sold to settle an estate, if you are appealing your real estate tax assessment or if you are selling your home without a real estate agent. An appraiser will certify that they do not have any future interest in the property and they will not gain or lose by telling you what your property is really worth. An appraiser considers the size, style and condition of the house, amenities such as pools, local government, neighborhood, schools, tax rate, proximity to town centers, recreation areas, parks and mass transportation and will also consider negative factors such as proximity to less desirable spots, such as airports, landfills, recycling centers and hazardous waste sites. The appraiser will then factor this information into a database of recent sales of similar houses in your area. To find out about appraisers in your area, contact the National Association of Master Appraisers, 800-229-6262, www.masterappraisers.org or the National Association of Real Estate Appraisers, 320-763-7626, www.iami.org/narea.cfm.
The other ingredients we recommend mixing in with all the above suggestions, whichever ones you implement, are being attentive to detail, and being patient until you’re sure you understand something or know you have all the facts. Your decisions will affect you and your family for many years. If you have any questions, give us a call. After all, that’s what we’re here for. We hope you have a great first month of summer!