In today’s turbulent real estate market (it sounded like a good start… J). Seriously, all markets can be good markets depending on the skill focus of your team. One of the base line skills you will need to obtain right away is the ability to determine the approximate value of a house.
Now we’ve all heard it time and again, “a house is worth whatever someone will pay for it.” I agree, as long as you have the time to wait for “someone” to come along, which could be several mortgage payments down the line. What if you are on the buying side of the table? You need to know how much the house is worth today, as well as what it will be worth if you decide to make significant changes.
The key to evaluation is finding comparable properties in the local market. If your subject property is a 4 bedroom, 2 bath, colonial with a 2 car garage and central air, then find out the selling price of another 4 bedroom colonial with similar features nearby. Any realtor can help you with this.
The key to this type of valuation is to only accept SOLD
properties in your comparable list. Time and time again I see sellers making the mistake of trusting the evaluation of the local real estate agent seeking their listing business, feeding them pie in the sky values. This mistake can be very costly to homeowners in time lost, and dollars spent marketing a house that is overpriced. If I live in a $400k neighborhood, and my crazy neighbor decides to LIST house for sale for $800k does that make my house worth $800k? HECK NO!
So when you find yourself involved in a real estate transaction and it is time to buy or sell, first be sure to seek out the help of licensed professionals, second be sure to accept only SOLD comparables.
Properly pricing a house for sale can mean the difference between a contract today, and a contract 6 months down the line.
Seek Freedom.
-Bryndan
PS: This method applies to single family houses and small multi family buildings only. Seek out an appraiser regarding other evaluation techniques for commercial property.
