Real Estate Appraisal:
Whether you're planning to sell your home or just curious to know what it's worth, you can find out with a simple evaluation. However, if you're planning to put your home in the market, it's best to learn and understand how to determine the value of your property. That way, you'll know whether an offer is fair or the assessors are giving you the right appraisal.
Don't rely on your neighbor's property value when trying to put a value on your own. Instead, you can follow the tips below to get a more accurate value or appraisal of your property.
1. Seek Professional Help of A Home Appraiser
The first method that you should consider to know the value of your property is to hire a professional home appraisal service. Availing the services of professional home appraisers is a trustworthy method of getting your property valued. You can rely on the expertise of the appraisers as long as you choose the right firm.
This is how a home appraiser will value your property:
- A home appraiser will first gather data from multiple listing services. He will factor in the location, lot size, room sizes, number of beds and baths, home's square footage, and the like.
- After compiling and comparing data, the home appraiser will do a cost summation when determining the value of your home. In this approach, the appraiser uses a similar property in estimating the cost of the building, its depreciation and the expected repair or improvement costs.
- Another approach that home appraisers use is sales comparison wherein the home appraiser compares the selling prices of similar properties in the same location. This approach uses local property listings and public records from sellers, owners, and real estate professionals. However, no two properties are the same. Therefore, the comparative value arrived will be altered to suit your property.
- When your property is made for investment and commercial purposes, home appraisers may use an income capitalization approach. Here, your property's value will depend on the net operating income (NOI) and the revenue capitalization or multipliers. Getting an accurate NOI will depend on your property's gross potential income (GPI), less collection, and vacancy losses.
2. Use A House Price Index Calculator
Wherever your property is located, you can quickly know the value of your home by using the house price calculator that the state offers. For instance, the Federal Housing Finance Agency (FHFA) has House Price Index (HPI) data which will give you estimated depreciation or appreciation in value of various properties.
Since HPI calculators automatically calculate your home value, you just need to go into the HPI site and fill up the necessary details. You'll need to input the city where your home is located. Then, enter the purchase price of your property and choose the number of years you want it to factor. Some HPI calculators will even allow you to compare values with other states.
Most calculators will give you a graph where you can see the price appreciation or depreciation of your property after filling the necessary details. Although it's an estimation of how much your property is worth, you can use it as a basis to know if selling your property is worthwhile or not.
3. Do A Comparative Market Analysis
Although it may seem complicated, you can learn how to do a comparative market analysis to put a value on your property. Especially when you're in the real estate industry, using a CMA should be one of your fortes.
Here's how you can make a DIY CMA:
- The first task is to gather all relevant data on your property. The more characteristics you know, the more accurate an estimate you’ll get from CMA. Aside from the location and number of rooms in your property, details like interior finish and other extraordinary features must be inputted.
- Aside from that, you'll also need recent comparable sales, which includes sales of similar homes. Here, you'll need more than four or five properties sold within the last year to compare with. You'll need the most recent data. Thereafter, use data of properties currently being sold.
- Another factor that will affect your property's value is the micro-trend around it. This means that you need to consider the happenings in your neighborhood. For instance, if your area has ongoing commercial developments, your property's value may go up since it may be near commercial establishments.
- After getting all the necessary information for your CMA, you’ll know the current, previous, and historical sales value of similar properties. Arrange the values from the highest to the lowest. This will be the price range prediction of your property.
Now that you know how to calculate the approximate value of your property, you can make a wise decision whether to put it for sale or wait for a little while. By hiring a professional home appraiser, you can leave it to the professionals and focus on your work. The appraiser’s report will give you the value and explain how that figure has been calculated. If you don't want to hire a professional, you can do a quick calculation using an HPI calculator. Alternatively, you may want to learn to use CMA so that you can figure out the value of your property on your own.