When it comes to taking proper care of your property, whether it’s a residential or a commercial one, it’s always a good practice to update yourself on its current market value. The opportunity or necessity to sell one of your properties may come up sooner than you think. It’s always better to be prepared in advance rather than hurrying things up at the eleventh hour, which could result in gross mispricing that could then have you losing money on the deal.
Here are some tips to help you with accurate property valuation.
Use online valuation tools to get an idea, and then consult a real estate expert to verify the result.
A quick Google search on how to properly value a home or property will immediately land you with many online value estimators, with some offering their services for free and others that charge you a small fee upon usage. Whichever the case, this is a very popular way to try and get an idea of how much your property is worth, with 22% of US homeowners using online estimators to do so, according to a recent survey by the Harris Poll in August 2018. For you, this is a great place to start.
Online property value estimators, or automated value models (AVMs), work by using public records such as property transfers, deeds of ownership, and tax assessments, alongside mathematical modeling, to try and predict your property’s value. They also take into consideration the recent sale and price listings of properties in your area, or where your property is situated.
However, we must note that you shouldn’t simply rely on the valuation result of one AVM to be the final price of your home or property. Each AVM works differently, and depending on the values they work with in the pricing of a piece of property you can end up with wildly fluctuating numbers. There’s also the fact that real estate agents and consultants that deal primarily in property will have more accurate AVMs than what is available for free online. So whatever value you end up with after using an online valuation tool, always verify with a real estate expert or agent before running with the price you received.
Research recently sold properties that are comparable to yours.
Besides using online valuation tools, another way to get an accurate idea of the value of your property is to research comparable properties that have already been sold or are being put up on the market for sale. A comparable property is one that’s similar to the one you have right now, especially when it comes to total square foot size, condition, neighborhood and amenities. As long as they’re similar in most (if not all) respects, then their prices should be the same. Real estate agents and experts should be able to help you readily in this regard.
Besides this, you can also check out the differences in pricing when it comes to bigger or more well-furnished properties. Is the discrepancy between the pricing of a more ‘premium’ property and one that’s comparable to yours a large or small one? Depending on the answer, it can help you get ideas on how to increase the value of your property without having to resort to costly renovation efforts. Again, the consultation of someone who works in the property or real estate field would be invaluable here.
Get a Broker Price Opinion for your property.
If you don’t want to deal with the legwork of research or online valuation tools, you can always go directly to a real estate agent and get a BPO, or a broker price opinion. This isn’t as detailed as a professional and thorough appraisal, although it does combine the agent’s own experience, the estimated evaluation of your property, and the market as it stands currently to provide a value to you. This value will often be used for listing purposes.
Besides a BPO, you can also get a competitive market analysis (CMA) from your broker. Like a BPO, a CMA relies on an agent’s personal estimate of value of your property. The difference between them is that a CMA also takes the recent sale value of comparable properties in your area.
While it’s ultimately more convenient and less of a hassle for you to directly get a BPO or CMA from a broker, and it costs very little to do so, remember that they may do so in the hope of you hiring them as your personal property seller.
Get a professional appraiser on the job.
For a more accurate property value, it’s always a good idea to hire a professional who can provide exactly that: a professional appraiser. With their years of experience, an appraiser will visit your property and approximate its value using the following variables, among others:
- Its location. Specifically, the region, city, and neighborhood where the property itself is located.
- The market demand. The demand (or lack thereof) of properties similar to yours.
- The property itself. The type of property you’re having valued, the characteristics of the building or home, any renovations or improvements you’ve made to it over the years, and the quality of land the property sits on.
- Comparable properties and estates. The sales, listings, vacancies, cost, depreciation, and other variables for similar properties in the same region as your property.
As you have already hired them for this exact purpose and cannot aid you in selling your property, you can rest assured that the appraiser will be impartial in giving you the accurate value your property needs. Just make sure that you fix up your property before allowing the appraiser to come over and inspect it, as any structural issues or signs of neglect can easily impact its value.
Curb your emotions.
If it’s a cherished home or property that you’re trying to find the value for, then chances are your own emotions are coming into play here. We all have the human tendency to believe that if something is ours, then it’s worth a lot more than anybody else may say, no matter if it’s our appraiser or real estate broker doing the talking. Breathe deeply and do as much as you can to receive advice with an open mind, and try to be as objective as possible.
Knowing your property’s accurate value gives you the peace of mind of not being ripped off in case of a sale. This will give you greater control over the process and allow you to get the most of any offer. Besides this, refinances, home equity credit, insurance premiums, and annual property taxes are also based on accurate values, so you’ll have an easier time with them when they inevitably arrive.