Today’s housing market is pretty challenging. Besides tighter credit and stricter requirements for obtaining mortgage loans, as a homeowner you need to know the true value of your property. This is very important if you decide to sell your house because it helps you set a realistic asking price. It may also be important if you consider refinancing your home because you should be prepared for your creditor to examine the value of your property. Especially due to declining property values in several areas on a national scale, creditors determine not only the current true value, but also the expected true value of a property after a certain period of time, namely months or even years.
Here are three popular methods that you can use to determine the true value of your property:
a) Ask for a professional appraisal
One popular method is to ask a professional appraiser to carry out a comprehensive and thorough assessment of your home. The assessment involves a physical inspection of your property to assess factors such as the number of rooms, bedrooms and bathrooms, size of the lot, construction material, and many others. It also involves verification of property data through public records. Especially, if you are considering refinancing, presenting an appraisal by a certified professional to your lender increases your chances to be approved because it shows that you are really interested in lowering the interest rate on your monthly payments to avoid defaulting on your mortgage. Besides, a professional appraise will also include an analysis of the market trends including an evaluation of whether it favors the buyers or the sellers, how intense the competition is in the area your property is located, what is the level of interest rates and other important factors that should be considered in the determination of the true value of your home.
b) Ask for the help of real estate agents in your area
Another popular method for determining the true value of your home is to ask for the help of real estate agents in your area. Real estate agents can prepare a Comparative Market Analysis (CMA) that includes a statistical report on comparable homes in your area. To make sure the CMA is accurate provide the real estate agent with exact information on you property such as the number of rooms, bedrooms and bathrooms, age, construction and square footage. Moreover, include your full address and zip code and make a list of up to 10 roads within a mile radius. By locating properties in your area that are similar to yours and have been sold in the previous 6 to 12 months, your real estate agent can determine the true value of your home.
In regards to comparables it is very important to know how long they stay on the market in your area before getting sold. Generally, if properties stay long on the market, the area is considered a declining market and final sales prices are lower than original asking prices even if the true values of the properties remain stable. It all has to do with consumer confidence and how potential buyers do not trust a property that has remained long unsold.
c) Check on your tax assessment
Some homeowners check on their tax assessments to determine the true value of their home. However, this method is not always reliable because historically tax assessments are lower than the fair market value of a property. This happens because taxes are not assessed every year and tax assessments may be even performed every ten years in certain neighborhoods. Therefore, valuing your home based on your tax assessment requires a lot of attention. Also make sure to look at your property tax bill to make sure the professional appraiser did not miss anything. For instance, if you have tore down a garage but it is still in the appraisal, or if you have installed a swimming pool but it is not mentioned, you should make sure to correct these things so that your assessment is accurate and your tax assessment corresponds to the true value of your home.
The true value of your home is the fair price your property is worth in today’s market. It is also the first step in pricing your property correctly. Therefore, the true value of your home has to be correctly determined to ensure that the expected selling price is fair and competitive both for you and your buyers.