So, you’ve got the mortgage pre-approval and have found a house that fits your budgetary needs. However, it would be unwise to go straight for the asking price because that may not be the property’s actual value. You need to determine the real value of a house before buying to create room for better negotiations. A Jersey Grown Homes LLC company can help you through the process. Here’s how to understand the actual value of any property you intend to buy.
Make Use of Online Valuation Tools
Online valuation tools use the information fed to them to provide the user with results from public records concerning the estimated value of an item or property. There are many home value calculators online which offer a simple yet convenient way to get a close idea of how much a property might be. Such information helps determine the value of any property you plan on buying. However, while most of these online valuation tools are simple and free to use, you should consider the fact that they are designed to provide an estimate only and not the actual price. Furthermore, they may not consider various unique aspects of the home that would appeal to you or the competition. Finally, renovations are usually not accounted for by these tools, which can significantly influence the property’s value.
Work with a Reliable Realtor
Real estate agents tend to have the necessary connections and techniques for determining a home’s value. They can be a helpful lot to work with as a second opinion to online evaluation tools. Most of these realtors use the Comparative Market Analysis (CMA) process to determine a property’s worth. A CMA would provide information about comparable homes in the same area stating how much they are selling. The realtor would look for recently sold homes of the same size, the number of rooms, style, home type, and most recent sales price. However, you should also note that a CMA doesn’t account for every property feature that may affect its value. That’s why you need to consider the next step as well.
Hire a Qualified Appraiser
Once you’re settled on a particular house for sale, it would help hire an acknowledged appraiser. The bank also requires buyers for an appraisal before finalizing the mortgage loan. It would be the appraiser’s job to give you a thoroughly researched estimate of a property’s value. This is done by visiting the property, evaluating the features, and reviewing recently sold or pending sale competition. Some of the things that the appraiser would check are the house’s location, the condition of utility services, the type of foundation, amenities included, additional repairs needed, or any signs of damage that would compromise the house’s structural foundation.
You shouldn’t confuse an appraisal with a home inspection that focuses on whether a home is structurally safe for the closing of the deal. Hiring the right appraiser can be tricky because a few regulations need to be confirmed during the appraisal. Therefore, it would be wise to hire someone who fits all the requirements of the Appraisal Qualifications Board (AQB)
Evaluate Similar Properties
You can decide to pull comps to determine your chosen property’s market value without hiring an appraiser. However, this method requires good judgment because property in the same community sold doesn’t make it a worthy comp. You would need to consider different properties that would interest you if the targeted one weren’t available. Once you’ve come up with the comparable houses, you would have to adjust for differences between the house you chose and the comps. The amount you add or subtract would depend on the market conditions, which also tend to vary broadly. Once you’re done with value adjustment, check on the highest and lowest comps to find the value of your property somewhere in between.
Finding the Right Figure
Getting the right price for a property to close the deal can become more manageable when you’re bringing carefully researched valuation for negotiating. The goal is to find the best price that would meet your budget’s requirements and those of your mortgage lender. If you’d like to know how to calculate the value of a house accurately, consider the above steps or ask for free, comparative market analysis from a reliable realtor.