Understanding Home Value
When you're getting ready to sell a home, whether it's your primary residence or an investment property, you’ll need to know how much it's worth. You know what you paid when you moved in. Chances are you’ve done a few renovations, but how much did those improvements increase the value? It's not always easy to know. Even if you have a buyer who's willing to pay a big asking price, if they're getting financed by a bank, it’s the lender that will have the final say on value. So what's a buyer to do when it comes to estimating value?
If you are willing to spend around $300, a professional appraiser from the lending company will come to your home, walk around, do a lot of pointing, and then come up with an official number that the bank will go by.
Perhaps you like to plan ahead and want to get an idea of your home’s value before it’s put on the market. Hiring your own appraiser will help give you a relatively realistic number. This could either be humbling if you had high hopes for a lavish price, or a gift of good news. More often home owners tend to expect more than the market is actually willing to pay. Unfortunately memories don’t add value.
There are real estate sites that offer home appraisal tools that will give you a ballpark estimate for your property. The downside is that this number could be much farther off than what the lender appraises. This is because the algorithms don’t account for on-the-ground factors.
We at Ali Safavi Real Estate recommend doing at least one of the above three options. Trying to guess based on market trends can leave you with a wildly inaccurate number. The housing market varies from state to state, city to city, and sometimes street to street. If your neighbor just sold their home however, that would be a closer representation on your home’s value than anything you read in the paper.
I’ve written before about ways to increase the value of your real estate. Paint, landscaping, smart technology, cabinets and siding are all good places to start. Don’t go overboard. Buyers want to put their own style into their new home – so a kitchen with too much customization can be as much of a turn off as it is an asset.
If selling isn’t in the cards this year, it’s never a bad idea to still keep up with real estate trends. Not all renovations are created equal. For example, instead of turning your garage into a man cave, consider a master suite addition or guest bedroom. Think in terms of the broadest appeal for when it comes time to selling your home in the next five years. You have a great investment on your hands. Continue to pay down the mortgage, keep an eye on the market, and maybe even think about taking your equity and buying a second rental property!