Determining the Market Value of Real Estate

How much is your home worth? How do you chose the right price? By doing some research, you can feel more confident about the market value of your property.

When you've made the decision to sell, you naturally want to get as much money as possible for your property. Accepting a sale price that is too low is like leaving dollars in a drawer for the new owners. But when a property is overpriced, potential buyers are discouraged from even looking at it. Also, a high sale price makes it more difficult for the buyer to obtain a mortgage, as the home will not appraise at the inflated value. Deciding on a price that is fair and reasonable can be the key to successful marketing, negotiating and closing of the sale.

The Method of Determining Value: The market value of residential property is usually determined by comparing it to similar properties that have recently sold and to those that are currently for sale. This is the method used by real estate agents and appraisers.

Obviously, no two homes are identical, but they do have similar features, such as location, age, square footage, number of bedrooms and bathrooms and type of garage. Tax assessed values are not intended to represent market value, but assessor’s data can help gain information about the features of a comparable home. Look at the homes in your neighborhood and using the resources described below, make a list of when they sold, the sale price notes about their features.

How To Find the Sale Price of a Property: The actual sales price and sale date to real estate is not a secret. The data is easily obtained from county courthouses for free. All you need is the address (or the parcel number for vacant land). At the Skagit County Courthouse in Mount Vernon, the treasurers office will look up sales prices for you, even over the phone. At the Whatcom County Courthouse, the treasurer’s office will tell you the sale price by the address, or you can walk down the hall to the assessor’s office and type the addresses into one of the free public computers. These computers will also give you the assessor’s data. Real Estate sales data can also be obtained over the Internet for free from web sites like:

  1. domania.com
  2. http://realestate.yahoo.com (click on Home values under Research Tools.)
  3. owners.com (click on “tools & Services” under the SELLERS title bar.)

Know What Properties are For Sale Now: Sellers should think like buyers to study the competition. Drive around and look at what is on the market now and judge those homes against yours. Look at newspaper ads, and pick up real estate booklets at the grocery store, including Real Estate By Owner. Go to open houses in your area. Visit the web sites of real state brokers and view the listings near you. Remember that the homes for sale right now may not be priced right and may never sell. But staying current on the homes for sale in the area will remove doubts about how your home compares.

Adjustments to the Comparable Prices: After gathering the information on other properties, some adjustments to those prices may be needed to arrive at a price for your property. If your home has more or less features than another property, then increase or decrease your price accordingly. Use averages to summarize the results. Using this method will determine a price range that is fair and reasonable. Notice that market value is a competitive value at a specific time. The value can change because of conditions beyond the seller’s control. Such as:

  1. Interest rates. Higher mortgage rates inhibit buyers, so home prices decline.
  2. The number of properties for sale. Competition lowers prices.
  3. Motivation of the seller and buyer.

As the owner, you always have the final say about the sales price of your property. Doing some research on pricing is well worth the effort, both for the financial benefits and for the confidence that you are making informed decisions. Good Luck to all Sellers and Buyers!

by Rich Neuenfeldt,
worked in mortgage lending
licensed real estate agent

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