Most people think that there is some sort of magical formula involved in calculating the value of a home that only professional real estate appraisers know. While it may be true that a professional real estate appraiser can come to your home and give your home a fairly accurate estimate of what it can be sold for, that does not mean that you cannot take an objective look at your home and try to calculate what it is worth.
The key word here is to try to be “objective.” It may be that you love your house because your children grew up there, you know the neighbors, you have established friendships and you even had your wedding in the back yard, but they have nothing to do with what your house is actually worth. What does this mean to you if you want to make an accurate calculation of the value of your home. This means that you must set aside how you feel about your house and look at it as the appraiser would look at it.
The appraiser would come to your house with a list of things to look at in order to determine fair market value. You don’t have to be an expert to know that the first thing that anyone will look at is your neighborhood. Go ahead and make yourself a list:
- Location – Is your house on the corner of a busy street with all kinds of traffic and noise, or is it in a secluded area that’s quiet and safe?
- Condition — Is your house in great shape? Will it only need some paint and minor things or does it have to brought up to code?
- Age — Is your house really old and looking its age or has it withstood the passage of time rather well?
- Size — How big is the land that your house sits on and how big is the house?
- Competition — How much are other houses in your area going for and are they similar to your house?
- Market Value — What have other comparable properties sold for in your neighborhood in recent (3-6) months?
All of these things must be taken into account when you are trying to do a fair calculation of what your house is worth.
Being objective also means that if similar houses in your area are selling for $500 thousand, you cannot ask for $750 thousand simply because you think your house looks nicer and the garden is well-kept. You may be able to get a bit more than what similar houses in your area are going for, but your house will really have to stand out from all of the other houses in the neighborhood in order to be able to get an above-market price.
The important things is not to price yourself out of the market if you are really looking to sell your house. If you price yourself out of the market, you may get stuck with a property you no longer want. And do be careful when if you are doing the calculations because you do not sell yourself short either and lose money in the transaction. That’s why it is so important to do an accurate calculation of the value of your home.
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