A home is worth what interested buyers are willing to pay for it. In the real estate market, acquiring an estimate of your property's value is incredibly important as you will obtain more clarity over your most important asset.
Nationwide markets have seen home prices soar in recent years. With interest rates projected to continue to rise higher, the housing market has become increasingly uncertain and ambiguous for the typical homeowner.
Thus, if you have plans to sell for a profit, you can take advantage of understanding your home’s estimated value.
Home Valuation Estimates
The modern boom in the real estate market has caused an abundance of accessible online property valuation tools. They work by applying an algorithm that employs publicly accessible and user-generated data to compare homes. These algorithms are known as automated valuation models (AVM). Although these models are easily accessible, it is important to keep in mind that there is always room for inaccuracy as these online tools can over or under value your property to cater their own agenda.
To ensure the accuracy of your home’s value through the various sources, you should be paying close attention to:
1) Tax Records
2) Comparable Sales
3) Listings on the Multiple Listing Service (MLS)
Tax Records
All homeowners pay property taxes. The exact amount of taxes varies based on your home’s value which is determined by your local tax assessor.
Tax assessors estimate your home’s value in one of three ways:
1) Sales evaluation: Comparing your home to similar home sales
2) Cost method: Determining the estimated cost to replace your home
3) Income method: Evaluating the potential income from prospectively renting out the property
The tax assessor’s office does periodic assessments of this value and proceeds to record it in publicly accessible records. This data is then used in AVM algorithms. Therefore, it is crucial that your tax assessment is done accurately to ensure an accurate depiction of your home’s estimated value.
Comparable Sales
Like stored tax records, property sales records are also publicly accessible. Thus, comparable real estate sales, also known as “comps”, helps buyers and sellers determine a home’s value by evaluating similar sales in a given neighborhood.
For example, if you own a three-bedroom, two-bathroom home with 1,800 square feet of living space, this information is used to approximate your home’s value by comparing other similar homes in your area that have sold in recent years.
However, comparable sales don’t always account for unique upgrades or features. For example, you may have finished your basement and added a recreation room with a half-bath, which, in turn, adds another 500 square feet.
Therefore, a home value estimator incorporating multiple factors is more likely to be accurate than comparable sales alone.
Listings on the Multiple Listing Service (MLS)
Comparable sales determine a home’s value based on the past performance history of other sales in the neighborhood. On the other hand, the MLS helps determine a home’s value by comparing it to the current fair market price of comparable properties for
listed sale.
However, unlike tax records and comparable sales, the MLS is only available to its members which consist of real estate professionals and companies.
How HomeOptions can help you
At HomeOptions, by joining our Homeowners’ Rewards Program, you can receive an upfront cash offer and receive free property value reports, periodically or on demand, to help you determine your home’s value.
At HomeOptions, we want to show you why home ownership should pay dividends. Get rewarded today simply for being a homeowner. Visit us at https://www.homeoptions.com/ to find out how much your property can qualify for.
More questions? Give us a call at 800-357-9992 from 9AM-5PM PST or emails us at support@homeoptions.ai for more information.