Determining your homes value: Smoke and Mirrors?

You, like many of us may have experienced the "Market analysis" scenario when a Real Estate Agent comes to your home and presents a CMA.  And, have you ever sought more than one opinion to get a better feel of the market? Often times this leads to a variety of values and opinions which can leave you sctatching your head and wondering why there is such a difference between them.

Lets take a moment to look at the  word "Appraisal".  In Real Estate terms, the definition is An OPINION of value. A Real Estate Appraiser's opinion is backed up by considerably more data than is contained in the CMA, which often contains fancy graphs and charts to dazzle you, but at the end of the day it is still an opinion.

Understanding trends in Real Estate is as important as evaluating the "Comps". Even in the same general location, trends can be moving in different directions. Knowing what the APSORPTION RATE in your specific area helps complete the picture. If your neighborhood only has a one or two months supply of homes, your value may be much different than a similar home in a neighborhood with a much higher supply.

There is no exact number for a home's value. Eventhough the formal appraisal does determine a final value, there can be differences in value because OPINIONS vary.

Smoke and mirrors? Maybe. But let's look at it like this. A home's value is really a range of values. If selling or refinancing, you want the value to be as high as possible within that range. If buying, vice-versa.

The most crucial piece of determining value is dertemining the agenda of the person giving the opinion. When listening to the numbers, ask yourself: Do they seem to good to be true? Are they trying to give a falsely high number to get me to list with them?, Do they seem to be "Low Balling" to get a quick sale? or Do the numbers add up and are backed by solid data and a thorough MARKET ABSORPTION ANALYSIS.

Smoke and mirrors are often that. Understanding the agenda behind the numbers is the key to clarity.

By William Szilagyi, Williams HomeSellers

 

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