Home Valuations
There’s No Place Like Home Valuations
When you first try to make sense of the many different methods used to find out property values or the range of ways professionals calculate the market value of home ‘A’ compared to the market value of home ‘B’, you may feel like you’ve landed in Oz. Everything’s colorful and interesting enough, but you need guidance if you’re going to find your way back home – especially if your original goal was to figure out your most accurate home value to begin with.
Let’s go ahead and accept the warm, happy answers up front. Personally and emotionally, your home is worth whatever it’s worth to you. If you’re happy with your residence, it doesn’t really matter what the market says about potential resale value or what realtors, appraisers, or those mean folks at the county property tax office think about its house market value.
In most other contexts, however, it’s useful to have reliable access to accurate home values when you need them and from wherever you happen to be. Whether you’re trying to calculate home equity, find out property values in preparation for selling your home, or check property value before applying for a major loan, the more accurate the information available to you, the better decisions you can make. Seems like it’s worth getting a better idea of the various methods used for home valuations. Let’s see if we can start laying out some yellow bricks to help you get where you’re going, shall we?
How Does accūRATE Work?
Every property is unique. Whether you’re buying, selling, looking to rent, wanting to flip, or you’re a realtor yourself gathering information, you’ve been limited in the past to best guesses and approximations. You may have a half-dozen comparables, but none take into account that the home you’re trying to sell has a remodeled kitchen with brand new high-end appliances. None quite capture the charm of that gazebo in the backyard or the easy access to the shaded walking path you have. The most accurate home value websites out there can’t realistically account for the difference you made in the basement with the painting and fresh sealant you spent days applying.
Welcome to Accury
But accūRATE can, because it doesn’t rely on estimates. It goes straight to those certified professional appraisals demanded by lenders and serious real estate moguls and brings that information to you wherever you happen to be on any connected device, and in a variety of formats depending on your needs at the moment.
When you’re considering purchasing a home for yourself and your family – making what for most of us is the single largest investment we’ll ever make in our lives – you don’t want to settle for estimates or guesswork. Imagine pulling up detailed notations about the very staircase you’re ascending during that walk-through, or being able to tell the realtor precisely how old that water heater is and what its imminent replacement does to the legitimate value of the home. Imagine pulling up the virtual images and detailed appraisal of that master suite before the agent even opens the door? If knowledge is power, why not arm yourself with as much knowledge as possible going in to such a big decision?
accūRATE isn’t about beating the system or taking advantage of anyone. It merely makes accessible to anyone the information your lender will be gathering eventually anyway, but in a time and way that helps you ask better questions and make better choices along the way. accūRATE can be a wonderful tool for real estate agents, contractors, and other professionals as well, simplifying their jobs – which in turn means greater efficiency and more profitability.
Real Estate, Meet accūRATE
At Accury, and across the Goalry family, we believe that most people are perfectly capable of taking more effective control of their personal and small business finances if only provide with useful information, tools, connections, and opportunities. We’re free with insight and explanation, but short on the “tricks” or “top secret methods” of this or that profession or financial scheme. Most of the time – for normal folks like us, at least – financial success isn’t about complex schemes or insider information. Most of us just need plain, simple English explanations and easy-to-use access to the same facts and numbers that professionals use every day, in formats that make sense without taking a class in how to use them. Most of us just need a little opportunity and encouragement to catch our breath and start making more effective choices.
+ The Most Basic Home Value Search? Open Your File Cabinet.
If you’re looking to sell the home you currently live in, you probably have a folder of paperwork somewhere showing what you originally paid for it. If you’re looking to buy, your realtor should be able to tell you when it changed hands last, and for how much. (This is one way some of those “accurate home value websites” can get a little cute. They promise to deliver the most accurate home value available then simply tell you what the property most recently sold for.)
Another number worth holding onto is whatever your local property tax assessor believes your property is worth. It may not be the most accurate way to find out property values in the real world, but it’s a hard number someone takes seriously, and that’s worth something.
+ My House Price As A Function Of Everyone Else’s Average Home Price
The most common approach to home valuations relies primarily on “comparables.” These are homes in your area which have features in common with the property you’re considering buying or selling and which have sold (or at least been placed on the market) in the previous six months or so.
This “sales comparison approach” is certainly a reasonable starting point for any effort to check house value potential or establish an average home price in the area. It’s the method your realtor most likely used when you first asked him or her about helping you buy or sell. They probably brought along printouts of three or four of these comparables along with their CMA – “Comparative Market Analysis.” These have become rather sophisticated in recent years thanks to the wonders of modern technology, but they’re still only estimates and starting points (which, to be fair, are precisely what they’re intended to be.)
Estimates determined via comparables are also the foundation of ever the most accurate home value websites. Some of these sites do some amazing things, and there’s nothing wrong with referencing them when you’re first starting to consider buying or selling a home or other property. Many allow you to rotate through various perspectives on the surrounding neighborhood or take “virtual tours” with only a few clicks. It’s fun, as long as you keep in mind that they’re presenting staged rooms, most likely professionally cleaned and photographed by someone who specializes in the right angles an lighting to make any property look magical and perfect and WAY better than wherever you live right now! Don’t compare your real life with their most carefully crafted best foot forward too closely!
When lenders need to get home value assessments as part of processing mortgage applications, however, they don’t use CMAs or Google a virtual open house for the property in question. When there are tens of thousands of dollars on the line, true home valuations require a bit more.
+ House Property Value Via Replacement Costs
Another straightforward way to determine current home value is to calculate what it would cost to replace the entire structure from the ground up tomorrow. Presumably the property is the same, so the calculation focuses on materials and labor, minus appropriate depreciation based on the age of the existing property.
While there are certainly advantages to this method, it’s far more common with commercial property than residential homes. The personalized touches and details which distinguish one home from another tend to complicate this method more than simply computing the replacement cost of a warehouse or office complex.
+ The Income Approach
Another way to check property value is to calculate the income it’s generated in the previous year or two minus the cost of maintain the property. The benefits and limitations of this method are probably obvious. If you’re looking to buy a home which has been used as a rental and you wish to take over the role of owner and landlord, your number one concern is probably going to be how much you can realistically charge and how much the property will cost in upkeep.
Most of us aren’t buying or selling our homes for this purpose, however. We need a more practical, easy-to-use way to unravel the whole home value real estate what’s my house worth mystery mess.
+ The Most Accurate Home Valuations
It should come as no surprise that the most accurate home valuations require a personal touch and a trained professional in assessing value. Not estimated house worth, not potential home resale value, but the actual precise dollar value of this exact property in this exact condition in the place it now sits and based on market realities this vary day.
A certified appraiser is your most accurate home value estimator. It’s also who lenders call when you apply for a home loan or want to refinance your mortgage. So what’s different about the home value real estate agents print out for you or the house property value the county sends you each year to justify yet another tax increase?
+ Certified Home Appraisals
A professional appraisal starts with an unbiased, state-certified appraiser with absolutely no interest in whether or not you or anyone else buys, sells, refinances, or rents the property in question. They’re legally required to be entirely insulated from anything related to your mortgage or financing beyond their designated responsibilities. Lenders hire them because they want to ensure that at no point during the life of the mortgage is the value of the property likely to drop below the balance owed. That means that an appraisal which comes in below the agreed upon purchase price can derail your financing quickly, or require you to purchase Private Mortgage Insurance (PMI) – an unnecessary and substantial additional expense.
A certified appraiser starts with the same sort of information your realtor uses to come up with those nice CMA printouts. Location matters, as do other conditions in and around the neighborhood. They look at recent transactions involving homes or other properties comparable to the one in question. That’s why we don’t suggest that a well-done CMA is wrong – but it’s just an estimate. It does what it’s supposed to do, and appraisers do what they’re supposed to do.
But where real estate agents stop is where certified appraisers begin. Once the sales comparisons are gathered and information about the neighborhood and wider community is compiled, it’s time to visit the property in person. The appraiser completes a detailed visual inspection of both the interior and exterior, making note of not of both major and minor features and flaws. Square footage is of course considered, along with number of bedrooms, bathrooms, the type of kitchen, any outdoor features like a deck or enclosed porch, etc. But the report doesn’t stop there.
Appraisers will notice that cute reading nook halfway up the staircase and calculate the value it adds to the property. They’ll document the minor water damage in the guest room and provide details on what that subtracts from the total. They pay attention to everything from the furnace in the basement to the ventilation in the attic. They’re not looking for problems just to be difficult, and they’re not looking for positives to persuade anyone to buy. They’re documenting in detail the precise value of the property as it stands that day as closely as reasonably possible. Just as importantly, they detail the “why” behind every number, plus or minus.
+ Accurate Home Values Via Certified Appraisals
In some ways, the appraiser’s report tells you more about the home than walking through it in person yourself. It’s also required to include visual documentation – a map of the street and surrounding area, a sketch of the exterior view of the home, photos of the home from a variety of angles as well as photos of each property used as a comparable. All available records are appended as well – public land records, tax records, sales and listings of comparables, etc.
As a seller, there’s great benefit to knowing the appraised value of your property before you list. As a buyer, there’s even more value in being able to get home value details and documentation before you put in an offer – and certainly before you apply for financing. If you’re considering refinancing or want to know if you’ve accumulated sufficient house equity to make a home equity loan an attractive option, you don’t want an estimate – you need an accūRATE. If you’re trying to compute your owner's equity based on current home value, those adorable online estimates won’t do. If you’re strategizing about how to quickly make your equity increase, all the comparables in the world won’t tell you what accūRATE can.
Remember when cell phones revolutionized access to loved ones wherever you were, whenever you needed them? It seems so odd that only a generation ago there were literally hours and hours when we couldn’t realistically reach our parents, children, partner, or best friend if they weren’t sitting by that landline with its twisty elastic cord. Remember when the internet revolutionized how much information you could access from almost anywhere about almost anything? Whether you need to know the symptoms of heat stroke or you’re trying to figure out if the drummer for Green Day is the same guy you just saw on that home renovation show, it’s all there.
Cooking. Fitness. Credit card balances. Social media. Weather. News. Cat videos. Technology has put them all at our fingertips with only a few clicks or swipes. Why should accurate home appraisals be any different? Why should we settle for estimates when what we really need is the accūRATE?
Buying or selling a home isn’t supposed to be easy, but it doesn’t have to be as overwhelming as it often seems. You don’t have to go in blind or settle for guesswork, however well-intentioned. Most importantly, you don’t have to do it alone. We may not always tell you what you want to hear, but we'll be as honest with you as we know how to be and trust over time you'll prefer it that way. We're not the most accurate home value site because we tickle your hopes with inflated figures; we're the most accurate home value site because we're honest about the importants of an accūRATE appraisal by a certified professional.
Watch this space for the re-imagined release of accūRATE. In the meantime, look around – you’d be surprised how much you can do. Let us know if we can help.
