What is Your Home Worth in Today's Market?

Are you a homeowner wondering what your property is going for in today's market or a buyer ready to put in an offer at the right price, here are some ways you can accurately assess the value of a property.

First of all, let's look at the two types of value attributed to real estate property.

Fair Market Value vs Appraised Value

The fair market value of your home is the price that a buyer and seller agree on. The best way to get this price is by asking a real estate professional (like one of us!) to do a Comparative Market Analysis on the property you're looking to sell or buy. Below, we explain a DIY version you can try to do on your own to get the gist of what this property might be going for in today's market. However, only a real estate professional can give you the most comprehensive and accurate estimated market value for a property by pulling information from the Multiple Listing Service (MLS), seeing your property firsthand, getting any info about recent updates on your property and knowing from experience what the current market is like.

The appraised value of your home is what an appraiser has determined your home is worth. An appraiser inspects the home in person and considers things like when the home was built, its location, size, number of bedrooms and bathrooms, any upgrades done to the home and recent nearby comparable home sales to come to a final value of the home, primarily for mortgage lenders and tax purposes. This number does not always have to match the final sales price of the property. The appraised value also does not necessarily reflect what your home is worth to a buyer. Individual buyers have different considerations and what one may find valuable - such as certain paint colors/wallpapers, light fixtures, flooring, etc. - others may be looking for something completely different or hoping to renovate what's already there.

If you want to try to find the value of your property in today's market here are a few things you need to consider:

1) Look at Your Property From a Potential Buyer's Perspective

Location: A potential buyer will look at the location of your home. Is it on a quiet cul-de-sac or next to a busy road or freeway? Is there major long-term construction being done nearby? Is it conveniently located close to amenities like shops, parks, hospitals, etc.? How good is the school district in that area?

Safety: Buyers will also consider the safety of an area or property. No one wants to live where their home, possessions and family can be hurt or taken. Certain safety measures such as already installed fences, cameras or a gated community with 24-hour security may be worth highlighting for buyers wary of having their home broken into.

Curb Appeal: The curb appeal of a property has big weight in boosting buyer interest because it's the first impression a buyer will get of the property. How big the lot size and home square footage of the property is also a factor for buyers wanting more space. It may not seem worth much, but having a nicely groomed yard, fresh exterior paint, and even well-maintained garden can make a home look more valuable than comparable homes in the area.

Updates: Any updated appliances, new upgrades to the home and recent renovations are also all things that buyers would be interested in. Buyers usually are willing to pay more for a move-in ready home that doesn't need lots of extra work and money put into it.    

2) Understand Your Current Local Market From a Potential Buyer's Perspective

Despite what your home last sold for, what buyers would pay for your home in today's market may be more or less than what it last sold for. A lot of that depends on how strong the job market is currently in your area or the number of available homes for those looking to buy. Ultimately, you need to look at what is affecting the local real estate market.

Interest Rates: What mortgage interest rates are at currently will highly affect buyer interest because high interest rates will deter buyers from applying for a home loan.

Time: The time of year that you are selling is also a major factor. Most families like to move in the summertime when school is out. Oftentimes, less people move in the winter months, meaning less buyer interest at that time. 

Supply and Demand: Current supply and demand is also something to look at. Are there more buyers than homes available? Then homes will most likely be going for higher and a bidding war between buyers is much more likely. If there's too many homes on the market and not that many buyers, then homes may sit on the market with no buyer interest for ages or at all -- especially if priced higher than the market value.

Do your own CMA: Lastly, think like an appraiser or real estate professional by trying to do your own Comparative Market Analysis. Do some research on homes in your area that are comparable to yours that sold within the last 6 months. Now, it's important to compare apples to apples and not oranges to apples! If the homes that sold are a different square footage, have a different number of bedrooms or bathrooms than yours or more features like an extra garage, fireplace, patio/deck then adjustments need to be made to the sold price of those properties to come to a more accurate pricing for your subject property.

For example, if the comparable property you're looking at has one more bedroom than your property you will probably have to minus $10-25,000 from the comparable property's sold price to get a more accurate pricing of what your property will sell at. Most appraisers and real estate professionals find at least 3 comparable properties, make adjustments to fit the subject property and calculate the average to come to a final value for the subject property. 

3) Know that Websites like Zillow, Redfin or Realtor.com Aren't Always Accurate

For one recent Comparative Market Analysis we conducted, we also decided to check Zillow, Redfin and Realtor.com along with a few extra websites to see what they said this particular home was valued at in today's market. We found that the home value on this property given by these various home value estimator websites had a discrepancy of almost $1 million dollars!

These websites often pull inaccurate comparables using homes that were sold from a much wider radius or sold earlier than 6 months ago. These websites also don't have all the most accurate up-to-date information on a home such as any recent updates or upgrades made to the property, so basing your home's value just on one of these websites' calculations can be really far off course. However, it may be a good starting place to gage the price potential buyers are seeing for your property online. 

If you are wondering what your home is going for in today's market or looking to buy soon and wondering what kind of homes you can afford in today's market, please don't hesitate to contact us. We will gladly do a Comparative Market Analysis on your property or for the property you're looking to buy and would love to chat with you about your options for selling or buying today.