HOW DO YOU EAT AN ELEPHANT?…. One bite at a time. But not all elephants are created equal. There are fancy circus elephants who are bedazzled and elegant and adorned with beautiful accessories. Then there are the average wild ones, who clean themselves up in nature’s waterways but don’t give off a wow factor. And then of course we have the ones like you see at the zoo who enjoy spending their days slinging mud and dirt onto themselves and don’t give a care about upkeep.
Much the same can be said about houses. There are beautiful brand-new homes, moderately kept up with some updating, and some that need a little TLC. But how do you determine value? Most homeowners are aware of their assessed value–which is the basis for your property taxes, but oftentimes, that value does not correspond with market value. There is also appraised value. This comes from a state-licensed appraiser who determines whether or not the property is loan-worthy for the lender. There are also a number of internet sites where consumers can go to get an estimate or “Zestimate” of the value of their property… though this is not an accurate depiction of value.
...oftentimes, that [assessed] value does not correspond with market value.
Then there is the emotional value that homeowners attach. Raising a family, making lifelong neighboring friends, the quirky ins and outs of the home that make it special to you, but may not add value to potential buyers who don’t care about where little Suzie first learned that she could climb from one end of the house to the other without ever touching the floor. Okay, it was little Christi, and yes, I could. But that’s neither here nor there.
How Do You Determine Value?
My point is, emotional value does not reflect the true value of a home either. A Realtor’s market value is the most important value to rely on. It is a similar process to that of a state-licensed appraiser’s. A Realtor creates a report called a Comparative Market Analysis (CMA). This report compares recent sales and current listing of homes similar to yours in square footage, location, lot size, number of bed and bath and quality of amenities. These sales and listings are referred to as comparables or “comps”. These comps come from the Multiple Listing Service (MLS) where real estate brokers see other broker’s listings, active, pending, sold, etc. It is a good idea to review the comps with your broker, discuss the neighborhood trends, and see where your home fits in the overall market. And ask questions… are prices going up? Declining? Are they flat?
