The world is a confusing place to be. Schools teach our children common core math. “Affordable” Care Act seems to have tripled my health insurance costs. Donald Trump is POTUS. The Kardashians are famous for being Kardashians. Kaepernick was named GQ’s Citizen of the Year. What tha wha?!??!!! I can see why everyone is so confused.
I am here to help clear up one of life’s most confusing things: Property values. Or, at least the terminology that we use to describe the different types of values we place on real estate property.
You are probably saying, “Renee, that’s not confusing. The value of my house should be cut and dry.” Well…. not exactly.
You see, there are several different types of values, and, quite frankly, they all have a level of subjectivity, and the end-value sorta-kinda depends on the use. We are going to briefly discern the three main types of real estate property values and where they are best used. All of these values have a very specific role.
Appraised Value: An appraised value is determined by a Certified General Appraiser. This is a licensed entity that has hours, upon hours, upon hours of education in deciphering market trends. Appraisers use their knowledge of market trends along with comparing recently sold homes that are comparable across a number of given criteria (aka: similar.) An appraisal report is typically several pages long, and can around 8+/- hours to complete, and normally includes an interior inspection and measurements. An appraised value is a “snapshot” of the property value at a given date, and is subject to change if the property or market conditions fluctuate.
Appraisals are a great resource to assist in determining the listing or sales price of a home. Lenders, banks, and mortgage companies use appraisal values to determine the amount that a borrower can leverage.
Assessed Value: An assessed value is set by your local municipalities tax assessors office. The assessed value is used to determine how much a property owner will pay in property taxes. These values are based on the size of the property and the exterior appearance. Re-assessments are done locally every four years, and are based loosely on current and perceived future market conditions.
Assessed values should be used to figure the amount a property owner will pay in taxes per year, but it isn’t the most accurate property value tool.
Market Analysis Value: A Competitive (or Comparative) Market Analysis, is used by real estate agents in assisting a property owner in determining a most likely sales price. This value is usually a tight range which is bracketed with a “quick sale” and a “I-don’t-mind-being-on-the-market-for-six-months” value. This value should most closely match the appraisal value since it is likely that both an agent and appraiser will (should) be using similar properties for comparisons.
A good real estate agent will look closely at similar properties that have sold most recently (6 months prior is best!) and make broad value adjustments based on differences between the sold property and the one they are valuing. This value is best used to determine a list price for a home.
The VALUE of a property boils down to how much will someone actually pay for it (and technically how much a lender will loan)? You can have an appraisal, assessment, and a market analysis for $1million dollars, but if no one will pay that, the question remains, “Is it really worth it?!” On the flip side, you may have someone who is willing to pay $1million dollars, but if they don’t have the cash to back it up, and the value can’t be supported by an appraisal for the bank to loan the money, the question remains, “Is it really worth it?!”
I invite you to call/email/text me… or find me on social media… if you want help valuing your home. I take a fairly detailed approach to finding the value that will help you gain the end result that you are looking for: selling quickly for as much as we can support!