Estimating the Value of Your Home
Like its name suggests, theSellersEdge.com is all about elevating a homeowners selling experience and giving sellers all the tools and strategies necessary to get the most out of their home in a timely manner. Of all the strategies available to a homeowner, however, competitive and accurate pricing is one of the most vital. It can literally make or break a sale.
Now, it is always important to have a professional appraisal done on a home, that way when a prospective buyer has an appraisal done, there won't be any surprises. However, for preliminary pricing, or for a quick glimpse into how much your home is worth, there are a few tips and tricks that can be used. They aren't supposed to replace a professional appraisal, but rather for preliminary pricing.
A Note on Data Collection
All of the following strategies will produce a home value, which can be referenced later as a data point. With a home estimation, the best thing to do is to take the average of as many data points as possible, the more data points there are, the better. If a homeowner simply takes the average of 3 data points, the estimate will not be as accurate. However, if the homeowner takes the average of 25 or 50+ data points, then the estimate will be far more accurate. So, it is advised to use as many strategies as possible to collect 25 to 50+ data points. That way there is less room for doubt.
Strategy #1: Reference Similar Properties
The most reliable strategy for prepricing a home is to compare it to homes in the neighborhood that have sold in the last year and are similar in features. Look at as many as possible. Even if another home is not in the same neighborhood, it can still be a valuable data point. These references and comparisons are vital as they are the most accurate indicator of what a home can be sold for.
The Tax Bureau of the State of New York issued a publication to aid in comparing a home to others to estimate its value. It listed 9 characteristics that need to match for the two to be a good comparison.
- Property Condition
- Year Erected
- Size in Square Feet
- Number of beds
- Number of baths
- Garage Size (1, 2, or 3 Cars)
- Lot Size in Acres
- Basement type
These are the most important characteristics for a comparison because these are the characteristics a potential buyer will be looking at when they come to look at a home. To access the New York State comparison sheet, follow this link: http://www.tax.ny.gov/pdf/publications/orpts/mv_estimates.pdf
Strategy #2: Property Tax Estimate
At least once a year every homeowner gets a statement from the government about their property tax. Though these are not usually happy occasions, these statements can actually be helpful in calculating the value of the home. Property taxes are based on the perceived value of the home and using their same system in reverse, a property's value can be ascertained. On a property tax statement there are two bits of information that are needed for doing this calculation: the tax assessed value of the property and the assessment rate. So, for simplicity's sake, let's say that on the most recent property tax bill, a property is claimed to be worth $80,000 and it's assessed rate is 80%; that means the property is actually worth about $100,000. The calculation would look like this 80,000 / .8 = 100,000. This is because the assessed value is 80,000 and the assessed rate is 80% (0.8). Once a homeowner has this bit of information, it can be added as a data point.
Strategy #3: Online Property Value Calculators
There is no limit to the amount of free online property value calculators. There is one for almost every real estate website on the internet. These can be great data points to add to the list, however, they are not 100% accurate and should be used with caution. If a certain online calculator says that a property is worth 4 times as much as all of the other data points that have been collected, it should not be used as it will skew the results of the estimate.
Ad Ins to Remember
Aside from the characteristics of the house, there are other things that can alter how much it is worth. For instance, parks and other nearby amenities, future developments, and even things that will take away from the value of the home like busy streets, close proximity to a factory, or any number of things.
The Plus of Parks
Parks are one of the most influential amenities on a home's price. There have been many studies that have shown how that a potential buyer is more likely to pay more for a home if it is bordering or close to a park or open recreational area. Some of these studies say that a nearby park can increase the home's value by up to 20%.
Proximity to City Amenities and Commercial Districts
City amenities like libraries, city parks, rivers, etc. are great for increasing a home's value. As are commercial establishments like stores and movie theaters. However, if a home is too close to a commercial establishment, it could actually be a detriment to the home's value. This is because, though convenient, a store backed up to the rear of your home could get hard to bear after a few months. So, those factors need to be taken into account as well.
Lastly there is future developments. Future developments can have a great effect on a home's value. For instance, if a new golf course is going to be built near a home, its value will go up, however, if a new freeway overpass is going to be built near the home, its value could plummet. So, it is important to keep in mind all the future developments as well.
After all of this data is collected and an average should be taken, this will be a rough estimate of what the home is worth. However, it is important to remember that this is not to replace a professional appraisal, it is merely to satisfy curiosity.