Your home's market value is an important factor in a long
list of financial decisions, including selling the home,
refinancing your mortgage, borrowing against your equity,
estimating your annual property tax bill, buying homeowner's
insurance, calculating the expected return on remodeling
costs, managing your other investments, estate planning
and so on. The trick is figuring out how much your home
is worth -- and remembering that how much you paid for it
months or years ago isn't relevant to its current market
value. It's not a bad idea to gather information from several
sources and compare the findings, rather than relying on
just one approach to home valuation.
Here are four suggestions to start:
Even if you're not planning to sell your home
right away. I will be willing to prepare a comparable
market analysis (CMA) for you as a marketing service
with the goal of getting your business whenever you decide
to move. A CMA shows the prices of recently sold homes that
are comparable to yours and the prices of comparable homes
on the market. I can give you a rough idea of what your
home would be worth, given its size and condition and local
market conditions.
Purchase a professional appraisal.
Unlike a CMA, a professional appraisal is rarely free. However,
the several hundred dollars you'll pay for an appraisal,
depending on size of your home and the complexity of the
work, could be money well spent if you're making a major
financial decision that hinges on the value of your home.
Appraisers rely on an in-person inspection of your home,
recent sales of comparable homes and other data to arrive
at an opinion of value. The appraiser's report is a full-blown
description of your home and the criteria used to formulate
the valuation.
Go to neighborhood open houses. Open houses
are a good opportunity to view comparable homes for sale
in your neighborhood and chat with real estate professionals
about the local real estate market. Two caveats: It's not
easy to be objective about your own home and you shouldn't
assume that the listing price on a for-sale necessarily
reflects the home's true market value. If you keep those
points in mind, information gathered at open houses can
be worth considering along with data from other sources.
Do research online. A number
of Web sites offer home valuation information free or for
a fee. The free service at iOwn.com displays sales prices
of comparable nearby homes and market activity data within
three minutes. Dataquick.com charges $30 for a full home
valuation estimate, while Appraisal-net.com offers a comparable
sales report for $9.95. VirtualRealEstateStore.com will
send a free home price analysis to your e-mail address within
72 hours or you can pay $14.95 for an immediate reply.
TIP: Price per square foot is a time-honored
method of real estate valuation and not a bad rule of thumb.
However, it doesn't account for a choice location, a move-in-ready
home or personal criteria and you should factor in how the
property was measured and whether the square footage includes
the garage or other detached buildings on the property.
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