How to determine the value of your home…
We have witnessed a trend of homeowners relying on Zillow to determine their home’s value. The problem with so-called “Zestimates” is that those estimates do not take into consideration the subjective factors that can cause a home’s value to rise or fall. Nonetheless, armed with their Zestimate, Sellers frequently ask us to answer the question of home value. Of course, homeowner perception of value can come from many sources including, the internet, county assessor, appraiser or even their neighbors. If you are relying on Zillow to determine your home’s value, you will likely not have the correct value. As the chief economist for the National Association of Realtors® has said, “there are lies, damn lies, and Zestimates.”
Some homeowners believe that their home’s value is what the county assessor tells them the value is. After all, they are paying taxes based on that value. You likely know that the county assessor typically looks at past sales amounts, as opposed to current sales amounts of similar homes, some as much as two years ago. Please know that we are not necessarily knocking these methods of valuation. Instead, we would like to point out that there are lots of ways to value a home.
There is a cartoon that laughingly points out the various ways people think of value. It depicts 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.”
We 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. With that said, many appraisers call us to ask about previous sales to find out whether a sold home is an actual comparable based on condition and quality of finishes.
Real estate professionals produce comparative market analyses to predict what an appraiser will likely determine the value to be. We look for sold 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. These are known as standard valuation guidelines. This is not what “Fair Market Value” is.
Fair Market Value is defined as “what a willing buyer will pay a willing seller in the open market in an arm’s length transaction.” We can tell you that many appraisers are not determining value based on this definition. As values are rising quickly, oftentimes appraisers cannot find sold comparable properties to justify the offer a seller has from a buyer. We have been working hard lately to help appraisers with this problem. Please know that appraisers are hired by lenders to be sure their loans are secure. They are not hired to determine “Fair Market Value”.
The Alaris Properties, LLC brokerage led by Jon Terry can sell your home and/or help you buy a home. Jon has been known as the Realtor® to call for many types of real estate transactions. This has helped propel him to be one of the top selling Realtors® in the area. Further, his team has developed the Alaris Properties’ brand to be associated with excellence in real estate.
In leading the Alaris team, Jon also leads area Realtors® by teaching ethics classes required to be taken by all Realtors®, and the Mandatory Update Class required by the Colorado Real Estate Commission for all real estate licensees. Jon stays current on real estate related matters.
He has the credentials of being a Realtor® who is also a practicing attorney, so charting the course through detailed real estate transactions comes naturally to Jon. One of his clients recently wrote us to say, “Jon is smart, organized and strategic. If anyone wants a real estate job done, they will be well served to work with Jon. What impressed us the most was that, in addition to being the best real estate professional we have seen in the business, he truly cares about his clients. This is an excellent combination.”
Jon and his team at Alaris Properties have closed hundreds of real estate transactions over the years and they have watched real estate values go up. With values rising, many homeowners will realize a new found increase in equity. The healthy Colorado job market is attracting job seekers who need a place to call home.
These motivated buyers are eagerly watching every new listing. With sales prices increasing and buyers at the ready, it is an encouraging sign to those considering selling. Jon and Alaris Properties are at the ready to help you stage, price and close your home.
Please consider calling Alaris Properties today at (303) 526-7400 with any questions about the market, to interview one of our brokers about listing your home, or helping you buy a home. Or, better yet, stop by our office in the Genesee Town Center.