Perhaps you are trying to estimate your current property’s market value or you found a new home you like, but aren’t sure it is priced fairly, here are some hints for determining values yourself.
The first, and most important, step is to look for comparable properties in the same area. The location is one of the most important details as it plays a major role in value—find properties located as close to your home as possible. Try to find places with similar features such as square footage, and number of bedrooms and bathrooms. The more similar a property is to yours, the better the comparison.
Even though researching the properties that are on the market is helpful for knowing the competition pricing, the most accurate gauge is the final price for the homes that recently sold. While the general public doesn’t have access to the Multiple Listing Service (MLS), a system which realtors use to post and search for property listings, you can check for the information on websites such as ilfls.com or redfin.com These websites are updated regularly, however, it is important to remember that they may not be as complete or as accurate as the MLS. They also may not have as much information regarding foreclosure sales and bank-owned properties, which often sell for much lower prices than market value. (stay tuned to ILFLS’ integration with MLS, soon)
If you can, gather a list of at least three properties comparable to yours, then list their features side-by-side. Some comparisons you might make include: number of rooms, the condition of the appliances and mechanicals (HVAC systems, electrical repairs, etc), whether or not there have been renovations, if there is a garage or other type of parking included in the price, and the school district. If a comparable home has something yours doesn’t such as upgraded kitchen appliances or a fully finished basement, you should subtract value. However, when your house has something another property doesn’t, such as a recently renovated bathroom, you may add value.
If it doesn’t look like your property has the value you hoped it would, you can step back and take a look at the research. What do the houses in your desired price range have that yours doesn’t? How can you change your home most effectively to add value? Looking at the comparisons, you should be able to find your answers.
On the other hand, what if you are a homebuyer and your research shows that the property’s asking price is too high? If you decide to present an offer lower than the asking price, you can present your comparisons and make the case why you believe the offer is fair which could your case.
Even with a lot of research, if you are not a licensed realtor or appraiser, it’s important to remember that your estimate may still be different than a professional’s. For example, realtors have access to more information about recent home sales in the area and have probably even toured many of them with their clients so they have firsthand knowledge of the competition. And even a realtor’s professional opinion is not the actual appraised value— though they often come up with the same value, it is possible for them to differ. If the two numbers do differ, the professional appraisal is the final answer when it comes to valuation. But the more research everyone does, the less likely this is to happen.