The Value Of Your Home
Looking to sell, but not sure what your property is worth? Maybe you are just wondering what competing properties are being marketed at?
Always get a professional valuation - while everyone can think their home is worth £1 million, its not always the case! We have emotions attached to our properties and tend to over- price, so remember to be realistic, do your own research and get a professional opinion. However, don't set the price of your property based on one valuation; instead, make sure to obtain a couple of quotes from various different professionals, and try to find a middle ground on the price point.
To determine the value of your home, you can get an inspection from a certified and professional valuer. Valuations will cost money, but will provide you with an unbiased and informed assessment. Professional valuers are independent. This means they are not associated with any real estate agency, so can give you an unbiased figure.
Valuers will usually use one of the following methods to assess your property:
Direct comparison: This assessment is based on a comparison of recent sales in the area of homes similar to yours.
Capitalisation: Mainly used for investment properties, this method involves the application of an investment yield to determine rental income.
Summation: This method involves the assessment of the value of the land. The value of improvements such as structural buildings can be added on top.This method is usually undertaken when there are insufficient comparable sales of similar properties.
Real estate agents give free market appraisals and can apply their local market knowledge and expertise of recent sales in the area to provide you with a figure.
They won't just include their own sales, but will analyse others in the area to give you a good idea of your property's value. This will give you an informal estimate of how much you might be able to receive from the sale of your home. The figure you'll be provided will will most likely be based on recent results for the area and market conditions, as well as the agent's judgement of the specific features of your home.
There are 5 main points to focus on when trying value your property:
Abandon your personal point of view. Sadly, buyers don't care how much you paid for the home, how many memorable moments you and your family shared in the home, how much cash you need for the down-payment on your next home or how much time and money you've invested in your home's hardwood floors, fresh paint, and lush landscaping.
Get a couple of Comparative Market Analyses (CMAs) from the professionals. Comps, or comparables, are regarded as the single-best tool in determining a home's value. They contrast criteria from recently-sold properties in a neighborhood, such as sale price, age of the home, size, and square footage. Real estate agents use comps to prepare a CMA for their clients.
Do your own market research. Go to open houses in your neighborhood and try to make an impartial assessment of how those homes compare to yours in terms of location, size, amenities and condition.
Calculate the price per square foot. The average price per square foot for homes in your neighborhood shouldn't be the sole determinant of the asking price for your home, but it can be a useful starting point.
Consider market conditions. Look at market trends in your area. Are homes selling quickly? Are interest rates attractive? Is the economy hot or cold? Is the local job market strong?