Home worth

Like most everything, home values are generally subject to the law of supply and demand. However, determining a home’s worth can be difficult due to the current economic conditions, location, comparable area sales, interest rates, and other factors. Knowing a home’s current value means greater control for the homeowner.

Why Understanding Home Values is Important

The benefits of knowing a home’s value go beyond purchasing or selling. Knowing a home’s value is also important when refinancing a mortgage or obtaining a home equity line of credit. In addition, insurance premiums and property taxes are all based on a home’s value. Furthermore, property taxes are almost always open to appeal. Therefore, by showing that an assessment is too high, it may be possible to lower your tax bill.

Tools for Determining the Value of a Home

Several online valuation tools are available to help homeowners and buyers assess a property’s current value. Although their estimates vary, they are reasonably accurate.

Realtors and lenders both sponsor these estimator tools. Be aware that a realtor-driven estimator may tend to provide estimates on the high side to encourage a potential seller to contact the Realtor. Conversely, other estimator tools may provide lower estimates to inspire a potential homebuyer to look for a lender.

Here are some of the tools for determining a home’s current value.

  • Automated Valuation Model (AVM) provides a value estimate for a property by just entering an address. The calculations are based on recent local sales and actual listings of surrounding properties. Realtors often use AVMs to provide a “confidence factor” for the accuracy of an assessment.
  • Realtor Comparable Market Analysis considers recent comparable sales (known as “comps”). A good indicator for a home’s suggested selling price is to compare the closing prices of two homes of similar size and condition in the same neighborhood within the last three months. Typically, a Realtor will perform an in-depth market analysis to determine a listing price at the beginning of the sales process.
  • Home Price Index Calculator by the Federal Housing Finance Agency tracks price changes from millions of homes sold in the United States for the past fifty years. The tool is valuable for both owners and buyers to show how much a home’s value has appreciated over time.
  • Professional Appraisers can provide an accurate assessment of a home’s value by using several variables (including comp sales, local market conditions, current listings, additions, improvements, and more). A lender’s appraisal is common practice for mortgage-supported transactions; however, homeowners can hire a professional appraiser anytime.

Buyers’ Market vs. Sellers’ Market

There can be situations in which a home’s value will vary significantly from the estimated value. One instance is when sellers are forced to compete with other sellers to attract buyers.

When the supply of homes for sale exceeds buyer demand, the buyer has greater leverage over the seller, which is a “buyers’ market.” As a result, homes for sale often stay on the market longer, and real estate prices decrease in a buyers’ market.

However, in a “seller’s market,” the demand for homes exceeds the supply. With fewer homes available, sellers have the advantage, and buyers must compete for fewer properties available for sale. Often buyers are willing to spend more for a home in a sellers’ market, and sellers can raise their asking prices. A shortage of homes often leads to a bidding war where buyers make competing offers and drive up the price of a home beyond the seller’s initial asking price.

Marimark Realty

Marimark Realty, a Tampa real estate agency, focuses on providing a personalized experience for buyers and sellers of real estate. As a full-service real estate agency, we help clients with luxury homes, homes for first-time homebuyers, commercial property, and investment property.

To begin the journey of purchasing or selling your home, or purchasing commercial or investment properties, contact us at your earliest convenience.

 

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