What is My Home Worth?

Sellers frequently ask us to answer that question of home value.  These days, homeowner perception of value can come from many sources including, the internet, county assessor, appraiser or even their neighbors.

Many buyers and sellers are familiar with certain websites that generate automatic values for homes. Some of these sites have become the go-to resource; however, they can produce values that do not reflect the actual market. Disclaimers on some websites show large standard deviations to protect themselves from being sued. On the other hand, some homeowners believe that their home’s value is what the county assessor tells them the value is. However, the county assessor typically looks at past sales amounts of similar homes, some as much as two years ago. Please know that I am not necessarily knocking these methods of valuation. Instead, I would like to point out that there are lots of ways to value a home.

There is an old cartoon that laughingly points out the various ways people think of value. It has a mansion with a caption below that says, “How the tax man sees your home.” Then, there is a drawing of a shack and below it the caption reads, “How a prospective buyer sees your home.” Next is a drawing of a modest looking home with a caption that says, “How an appraiser looks at your home.”

I think of this cartoon because, frankly, in most real estate transactions, that is how your home’s actual value will be determined. A bank or mortgage company will likely loan a buyer the funds to purchase the home. The lender will hire an appraiser who will prepare an appraisal using “standard appraisal guidelines” to determine that value. Standard appraisal guidelines tell an appraiser to find similar nearby homes that have sold recently and make appropriate adjustments to come up with a value for your home.

Realtors® produce comparative market analyses to predict what an appraiser will likely determine the value to be. We like to find homes that are in your neighborhood, built around the same time (+/- a few years), similar square footage (+/- 20% of above grade square footage), situated on a similar lot size (+/- 20%), and a similar type of home (comparing ranch style homes to other ranch style homes), etc.

– by Jon Terry, CMAS®, J.D.

Past Chair of the Mountain Metro Association of Realtors®

This article was published in the Canyon Courier newspaper.


 
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