House Appraisals and Home Market Value
North American Real Estate Valuations

house appraisalsHouse Appraisals: Establish a current House Valuation Online in Real-Time! Detailed real estate property reports fit a variety of uses. Whether you're a Buyer, Property Owner, Assessor, Auditor, Appraiser, For Sale By Owner, Insurance Agency, or a Lending Institution, you can instantly and accurately determine your real estate values. House Appraisals! See a sample valuation NOW.

House Appraisals: Determining the Value for Your Home

A house appraisal is an opinion of value, an estimate of worth. The Federal National Mortgage (FNMA) states, "Market value is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale,(whereby) the buyer and seller, each (are) acting prudently, knowledgeable and assuming the price is not affected by undue stimulus." The value of residential real estate is estimated by comparing the subject house with similar properties that have been sold recently. Look at your neighborhood to find comparable sales or properties in similar neighborhoods that share similar characteristics of lifestyles, income level of residents, surroundings, average age and value of houses.

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Neighborhoods:
Neighborhoods have boundaries and barriers to the best neighborhood which may signal an abrupt change in lifestyle i.e. railroad tracks, freeways, highways, major traffic arteries, lakes, rivers, mountains, etc. There are political boundaries created for government purposes, such as school districts, assessment districts, zoning districts and city limits. In your neighborhood analysis, you may consider recreational facilities common to your situation. The focus is to find comparable homes in similar neighborhoods for your analysis.

Appriasal Comparisons:
The best way for determining the price to set for a given property is to base that estimation on the fair market value comparison. The fair market value comparison approach uses the principle of substitution. That principle states that the maximum value of your house and property tends to be set by the sales price of an equivalent, equally desirable, similar substitute house and property, for a certain day in time. Find 3 or more homes that sold recently having amenities and characteristics similar to yours.

Because properties are seldom alike, it will be necessary to make adjustments between the comparable properties as compared to the subject property (your property). This process equalizes the properties in the comparison. A good definition according to a leading appraiser, Ventolo and Williams, states that an adjustment is a "decrease or increase in the sales price of a comparable property to account for a feature that the property has or does not have in comparison to the subject property."

In other words, the comparable properties are adjusted to reflect the value of the subject property. You never adjust the subject (your own home). If two houses were identical in every way except that the subject (your house) had a deck and the comparable did not, the value of the comparable would be adjusted upward.


By this appraisal method, the subject (your house) reflects more value when compared to a comparable house with deficient items (such as no deck or no garage). Always remember: comparable sales must be adjusted and not the subject property. The Federal National Mortgage Association (FNMA) puts it this way: "The subject property is the standard against which the comparable sales are evaluated and adjusted. Thus, if an item in the comparable property is superior to that in the subject property, a minus (-) adjustment is required to make that item equal to that in the subject property. Conversely, if an item in the comparable property is inferior to that in the subject property, a plus (+) adjustment is required to make that item equal to that in the subject property."

In other words, if a comparable sale property has a major improvement that your property does not have, make a minus adjustment. On the other hand, if you enjoy a major improvement and the comparative sale property does not, make a positive adjustment. Round off adjustments to the nearest $100.
There are four basic phases involved in this house appraisal approach:
  • Recording and analyzing data from your property and potential comparable properties
  • Selecting the appropriate comparable data
  • Developing reasonable adjustments based on market data
  • Applying your findings to the subject (your property)

Concentrate on finding comparable sales that have characteristics similar to those of your own home. A variety of these parameters are listed below in descending rank of importance, the first listed being more important than the last listed.

Categories of Appraisal Compatibility:

  • similar neighborhood
  • total square feet of living space
  • number of rooms, bedrooms, baths
  • sold preferably within 4 months
  • sales price within general market price of your home
  • sales or financing concessions
  • location
  • quality of construction
  • style of house
  • age of house
  • condition
  • square footage
  • property site and view
  • functional utility (deficiencies or overbuilt features)
  • number of garages
  • swimming pool, fireplace(s), remodeled kitchen, kitchen equipment, etc.
  • storm windows or replacement window or thermopane windows
  • basement i.e. finished, unfinished or none
  • deck, patio, porch, etc.
  • landscaping
If you don't want to do it yourself, spending $120 to $300 for a qualified house appraiser to determine an accurate and current value for your home is a small price to pay considering the overall picture. You'll get a figure to hang your hat on and piece of mind that you are offering or buying the home at a fair price.
Finding that right price is offered free of charge by real estate professionals. It's not a bona fide, time-consuming appraisal, but rather a "ball park figure." They refer to it as a comprehensive market analysis (CMA). But finding the best, honest, hardworking top producing agent is not easy.
Only 30% of the homes sell within a 3-month period under average market conditions. Because of competitive market conditions, pricing your home a few thousand dollars off the mark can effect its salability. The typical buyer will look at the lowest priced homes first.
A "too-high" price discourages the knowledgeable agent from showing your home since he also knows that most buyers are knowledgeable and don't want to waste their time looking at an overpriced house. Showings are reduced and offers are minimized. Some say 80% of the marketing is in pricing your home right.

The more home showings you can get, the better the chance you have to sell your home. Often the first offer is the best offer. The reason the gurus give is that your home is new to the market and a certain excitement exists, since the "newness" polish hasn't worn off.



 

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Selling Your House:
Tips on Selling & Marketing.
Seller Fix-Up Advice.
 Reasons Houses Don't Sell.
How to Price Your Home to Sell.
Selling a Condo.
Problems and Solutions For The Do-It-Yourself Seller.
House Sales & Listing Agents.
Site Index.

Buying Your House:
HouseTips - Buying Real Estate.
Monthly Payment Calculator.
Home Price Affordability Guide.
 Buy vs Rent.
Buying a Condo.
Avoiding Closing Problems. Frequently Asked Questions.
Buyers Agents.

Mortgages:
Mortgage Information.
 Mortgages Online.

 

Additional Real Estate Info:
House Improvements - should I make improvements or not? What is the percentage of pay back? What types of improvements should I undertake? What types should I avoid?

Interviewing Real Estate Brokers.

Relocating? How to select the best qualified top rated agent in the area of your choice.

House Tax Benefits of selling real estate.

Dictionary: Definitions of terms used in Real Estate.

Real Estate Commissions:
How do buyers agents and sales agents differ?

Environmental Factors: Valuation of Contaminated Properties: What your home inspector may find. Reason for a property tax appeal?

 

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