How are property value estimates used?

How are property value estimates used

Value estimates for property are usually utilized by banks, insurance companies, as well as homeowners to determine whether financial transactions are able to move forward. For instance, if value of your home does not meet the amount of financing you’re planning to purchase then it’s considered to be a risk for the bank. The banks usually require their value adequate enough to be considered a risk in the event that they require to sell the property in order to recover their investment.

If the property is in foreclosure (worth lower than value of the resale) then the financing will typically be viewed as a risky loan for a bank, which could result in a loss.

Reasons homeowners might need or use a property value estimate:

  • Refinancing or financing an existing loan
  • The calculation of the net profits from the sale
  • Finding homeowners insurance
  • Making a strategy for home pricing
  • Baseline for the sale of a home in the near future

Start With a Free Home Value Estimate

Input a few information about your home so that we can bring you with an initial estimation of the value in under two minutes. It’s not a substitute for an appraisal of your home, but it could be a useful starting base.

How can I get a property value estimate?

There are numerous methods of obtaining an estimate of value for your home which range from a ballpark estimate to an extensive report. Here are the most popular methods that value is usually estimated:

Home Value Estimator (HVE) or Automated Valuation Model (AVM)

Online estimators of home values are available on a variety of websites, including Zillow, Trulia, and Realpro NJ. The automated valuation model generally employs a mix of data from users and public transactions to determine the value of your home. The method usually gives you an estimate of the value of your home based on this information. Realpro NJ’s estimate will examine a no-obligation cash deal via the Simple Sale platform estimating what you could receive in the event that you place your home for sale with an experienced property agent.

Allen states that knowing about an agent opportunity is essential because home value estimators online aren’t without limitations. They aren’t able to see your home and any improvements that you’ve made. However, an agent is able to tour your home. It is recommended to schedule an analysis of the market to get more specific details.

Comparative market analysis (CMA)

A CMA or CMA is usually conducted by an agent for real estate that examines your home against similar properties in the neighborhood. Some of the factors agents take into consideration include the location, area, the number of bedrooms, the condition, and any other amenities like a neighborhood golf course. Certain agents cost between $100-$200 to complete an CMA report. Some agents add CMAs for free. CMA for no cost as it’s a way to advertise their services to prospective customers.

When an agent employs other comparables (short of comparables) they’re looking at your house against recently sold homes in the area that share similar features. The story we have just published illustrates steps on how a variety of websites compare properties.

Professional appraisal

Appraisers who are competent and licensed by the state, typically perform appraisals by walking through the home that can last up to two hours based on the size. Appraisers will take measurements of the property and take pictures to document their findings in the appraisal, which will be certified.

When analyzing a property appraisers perform an inspection of the property’s appearance and will also consider flood zones and examine the characteristics of similar homes. They differ from home inspectors and are not inclined to walk under the home or climb ladders for a look at the roof. However, they’ll take a look at the condition of the roof shingles as well as other factors that could affect the valuation.

Should I get an appraisal when selling my home?

Although appraisals can focus on providing you with specific details about the worth of your home, Allen recommends waiting until the property is sold so that the buyer can pay the cost. An average appraisal for a single-family house will cost from $400 and $500. Allen adds that appraisals may vary between appraisers based on their expertise, so even if a buyer has particular requirements for an appraisal prior to listing, Allen believes it’s excellent to use the CMA.

The situations where a pre-listing appraisal could be beneficial include:

  • Your home has distinctive characteristics that are difficult to determine the value
  • The property is located in an area that is remote and where comparable sales are hard to come by.
  • You’ve been gifted a house and are planning to sell the house — particularly with diverse inheritors who don’t get along on the price.
  • The property is overgrown or has surplus land, making it more difficult to determine its value.
  • There aren’t any offers and must review your price

At time’s end an agent can pull poor comps, or make really good comps, because the moment I’ve got twenty houses that are selling for property, we pick two or three properties to look at it against. If there are twenty houses, you’re likely to find several on the lower side as well as have a few on the upper side. In the end, it’s up to the agent to decide the ones they’d like to utilize.

Can I get a CMA if I’m not selling my home right now?

Even if the client doesn’t plan to sell their house immediately, Allen will often recommend taking the CMA and it can prove useful in the future.

“We’ll inquire whether they’d like to get an analysis of market trends and they’ll reply that we’re not going to sell for one or two years. My response to their questions is we’ll start getting one completed today. It takes just a bit of time however, it’s a lot of enjoyable for the seller and us, as we’re able to determine what the value of your house is or what buyers would be willing to pay for your house in today’s market.” Allen explains. “And then, whenever we do it again in six months or a year, we can see if the value has gone up or down, so we know if we’ve made the right decision by waiting, or if we’ve made the wrong decision by waiting.”

Allen suggests speaking with several agents before deciding which should be the one to sell your house. Because CMAs differ with regards to pricing, a particular agent could lower the price to attract different offers or claim it’s worth more to get the listing.

“So in the final analysis, a real estate agent could pull extremely poor comps, or draw really great comps since when there are twenty houses which are showcasing the same time, we select two or three homes to look at it against. If there are twenty houses, you’re likely to have several on the lower side as well as have some on the upper side. It’s really up for the agent to choose which one they’d like to utilize.”

What factors impact appraised home value?

Numerous factors in the current market for housing can affect and even boost the value of your home. Below, we’ve listed the most frequently-used things you are not able to change, and the ones that you can alter to benefit increase the value of your home.

Factors you can’t change

  • The location – unless and until you physically move your home, it will remain within the same area
  • Demand and supply – whether it’s a current market for sellers or buyers is beyond your control.
  • The age of the home is a factor. It was constructed in a specific year and will continue growing older with each passing year.
  • Real property comps – no matter what the prices of houses that have sold in your area are recorded in the public the record

Factors you can change

  • The dimensions and living space of your house You can make changes to rise your area
  • Your home’s condition Avoid deferred maintenance by monitoring the upkeep regularly
  • Modernization and updates – remodeled bathrooms and kitchens can add substantial value

What outside factors impact property values?

Other factors can affect both the buyer’s and seller’s behaviors and, ultimately, the value of a home in the buying process. These include:

  • Interest rates have increased. Since the interest rates have risen, Allen says people who earlier put their home purchases in the back of their minds are looking again after they have adjusted to the higher rates.
  • Zoning regulations for industrial zone close to your home may impact the traffic and noise
  • The economy – when inflation and unemployment are high, it can impact the ability of buyers to afford it
  • Materials and supply chain costs Construction costs are reduced, which reduces the supply of housing
  • Politics – if there are new laws and taxes boost which could make affordable housing difficult to find
  • The effects of disasters such as earthquakes, floods and hurricanes are able to destroy properties and reduce their the value of property
  • Risks such as garbage dumps or power plant located close to homes can reduce their worth

Other recommendations to help increase your home’s value

Allen suggests that a great method in order to improve the value of your home is to get rid of clutter and deep clean. arrange your home.

“You don’t need to redesign every bathroom or kitchen. To maximise your profits There’s plenty of money that can be earned by cleaning your home, organizing it, making it appear more spacious than it really is. Most people keep a collection of knickknacks throughout the years, but they do not notice it since they are there all each day.” Allen says.

The bottom line:Get to know your home’s value

In your search to determine the value of your home Here are some important considerations and actions:

  • Get a ballpark estimate Realpro NJ’s HVE simple to use and is free to use as a base
  • Take a look at the idea of a CMA regardless of whether you’re being sold or otherwise, it’s an excellent method to assess the current value to make plans or evaluate
  • An appraisal prior to listing is not mandatory If you’re in contract, the lender will require one.
  • Certain factors are out of your manage – the market conditions, location, economy, and natural catastrophes
  • Accept the things you can improve Clean tidy, declutter, organize and make sure you avoid delayed maintenance

If you’re considering selling and want to learn more about the worth of your home the Realpro NJ Agent Match platform can connect you with the top-performing agent in your area who will bring the CMA and expert tips about how to improve the value of your property.

Read More: 10 tips to sell your home faster

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