Methods for finding market value of a property

5 Replies

There are many methods used to find the market value of a property. Some are preferable to others, especially in distinct areas. In other instances it is best to mix up three methods and compare the prices thereof.

As a newbie investor I have begun to use Zillow, but it doesn't seem to be reliable. Some studies show half of the properties can be off by 5% in market value! I have mixed opinions about the county appraiser's value listed on their website because the market value of a property seems too different than what some investors are looking to buy/sell that property for.

What are your preferred methods for finding the market value of a property?

Zillow is crap. It is frequently off by 20% or more. The only reliable way to compare valuation is to compare the sale prices of similar properties. Those prices will be listed with the County and will be posted eventually. Those who have access to the MLS (multi list service) (Realtors, lenders, appraisers, etc.) can usually access the sales records the soonest.

Zillow zestimate is crap. The recently solds on Zillow will give you a decent idea to comp the property so long as you're doing apples to apples for type of house, beds, baths, sqft, etc... I always do this first and then if I've got a good deal I ask a realtor friend to confirm my numbers. 

The market approach together with the income and cost approach. For most investors that's the only three approaches to value they will ever need to know, yet most will never learn them. 

Another method is physically going to properties on the market in your area and look at them, look to the basic concept of "DUST" in the real estate, after about 50 homes in a band of price ranges, you'll be able to guess, it might take 100.

Too bad newbies don't have a "Blue Book" for real estate, wouldn't that be great......

Oh, that's a 2006 model Harrison Built in Oak Hills, zip code 65606, ah, it says here the 3/2/2 is worth, in good condition, $212,500.00 !  Done!!

If Zillow is close on a true market value, I'd say they got lucky.

Tax assessments are not based on current market value, if a market value at all. They are usually done by a block method using square feet, they don't have time to look at each property so if you bet on that value, you'll be wrong, it's apples and oranges.

If you don't know what value is based on and the 3 approaches used, you're not even in real estate, you might be playing some guru game playing house like a 5 year old girl, just trying to play with bigger houses. For those who are actually serious about real estate, learn the basics and how properties are valued, the rest can go play. :)   

Originally posted by @Joe Calderon :

What are your preferred methods for finding the market value of a property?

For single family or small multifamily (up to 4 units) we use recently sold comparables (6 months of less) of similar properties within a mile radius or less, to determine value. Our number one source for sold data is the MLS; followed by pulls from public records. We never use Zillow. We actually found Redfin to be a good tool to create market value. We don't have a need for it but it works.