What Is My Home Worth?

By: Showcase Homes 

What Is My Home Worth?
Understanding the appraisal process and what drives home values.
Written by John Tatman ASA, IFAS, CRA
Retired Real Estate Appraiser

Actually, there are two home values, the value to the homeowner and the value to the potential buyer. Unfortunately, both values are emotional and not facts based on market data.
 
The homeowner has time in the home, family, years of memories, children growing up, maintenance, perhaps blood sweat and tears in room additions, kitchen or bath remodeling. Obviously the owner places a high value on his/her castle and rightly so.
 
The buyers on the other hand see things differently and act on different emotions.
The buyers are looking for that emotional spark at the first viewing. The all-important first impression is what drives the potential buyers…at first. From there the first impression quickly turns to affordability, the cost to get in the home, the closing costs, the monthly notes, the taxes. Should I make an offer? What is the least I should offer?
 
Market value is somewhere between these two emotional extremes.
 
This is where the appraiser comes in with an objective opinion backed by market data.
 
Market value is defined as the price a willing buyer will pay to a willing seller for a product or service. In real estate, this is known as an “arms length transaction” meaning both buyer and seller acted willingly and not under duress.
 
Where does the appraiser begin and how do they arrive at those magic numbers called Market Value? It is not magical at all; it is a methodical series of analytical steps.
 
First, the appraiser makes a physical inspection of the property, determining size of livable floor space and making note of all amenities, such as the number of bedrooms and baths, the garage, washing facilities, storage areas, and any special features such as a fireplace, pool, patio or outbuildings.
 
After a through inspection, the appraiser has a starting point to arrive at market value.
With all the physical data collected, the appraiser uses two or three methods to arrive at market value.
The three methods are:
Market Approach: The appraiser searches for comparable homes in your neighborhood, subdivision or within your city with comparable neighborhoods.
Cost Approach/Cost analysis: The appraiser calculates the cost to build your home at current material and labor costs, less depreciation for structural damage, poor upkeep and neighborhood disintegration.
Income Approach: The income approach does not apply to residential market value. This approach applies to income producing properties such as residential duplexes, apartments and of course commercial properties.
 
If the property being appraised is a residential structure many factors are taken into consideration beyond the physical attributes of the property. The appraiser also considers the compatibility of your home within the neighborhood, such as does your neighborhood add to or reduce the value of your home? This involves pride in ownership factors, which occur in most communities.
However, location, location, location drives the final market analysis.
The appraiser considers the ebb and flow of growth and its direction within your town or city due to socio-economic factors. In addition, future city planning contributes to a large degree in your home maintaining its present value.
 
In summary, determining the value of your home is a complex procedure. The appraiser must know his/her city well and all the socio-economic factors driving the market. This takes years of observation, study, and considerable research by the appraiser.
 
When considering a professional appraisal, it is best to choose an appraiser who is certified and has any of the following professional designations: MAI (Member American Institute) ASA (American Society of Appraisers) SRA (Society of Appraisers) CRA (Certified Real Estate Appraiser) IFAS (Independent Fee Appraisal Society). This list is a few of the most recognized professional appraisal organizations in America.
 
John Tatman
Texas Showcase Homes

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New Homes

Freshly constructed homes have good quality control standards, newer construction techniques, and better energy efficiency than many older homes. They often carry a 1+ year warranty and good financing options. The downside is that while they are easy to get into, it is very difficult to sell them for a few years (especially if the builder is still in the subdivision), and the final price is often higher than an older home (though they usually require very little up-front money, and many builders will give thousands of dollars of upgrades and incentives.) The neighborhood will not be established, there will be very few shade trees like in an older neighborhood, and it will have more of a frontier feel. If you like “new” and “shiny” like a new car, then the clean smell of a new home will be your thing.

Existing Homes

These are owned by homeowners who want to sell their homes. They have been seasoned, and may be better constructed than newer homes. Many people like the fact that they have the charm and history of having been lived in - in fact, many buyers think that a new home is "cold" if it hasn't been lived in. Their age gives them respectability, and they are in established neighborhoods with tall trees and established neighbors and schools. They may be funky/customized with interesting quirks. These are for people who like "established" OR "different." They are much easier to sell soon after you buy one. Many also carry a 1-year warranty. They may not appeal to people who like being the first in a home or who want one built especially for them.

Which do you like better - New or Existing? People who like one may not like the other, though there are many exceptions who like both.

© 2006, Jon Kresh

Article Source: http://www.articledashboard.com

Jon Kresh is a Realtor in Austin, Texas. He finds existing, new, and foreclosed homes with good values for Austin Homebuyers.

Texas Showcase Homes

Texas Real Estate – Property in the Big State

By: Raynor

Everything in Texas is big, including real estate options. If you’re considering a move to Texas, here is a primer on the state.

Dallas

Dallas is a big city with a definite oil influence. There is a certain over the top feeling about Dallas, but people are pleasant and the city has first-rate services. Make no mistake, living in Dallas is living in a big city. It comes with all the negatives of a big city such as traffic, but all the positives such as professional sports teams and so on. If you prefer living in a big city, Dallas may be a good choice as real estate is surprisingly cheap.

Austin

Austin is the home of the University of Texas and one of my favorite cities. With a definite college town attitude, one can experience an odd mix of the Wild West with the liberal attitudes of college students. The town boasts famous music festivals and, of course, an avid group of college football fans. Eternal optimist, they even think they can beat the Oklahoma University Sooners in 2005.

Houston

Constantly in a friendly competition with Dallas, Houston is a city that stands on its own merits. Those merits, however, are based on the boom or bust nature of the oil industry. When things are going well, Houston is abuzz and grows in leaps and bounds. When things are going bad, the economy suffers and so do the people living there. This boom or bust scenario has led to overbuilding and the city has an organized feel to it. All and all, not a personal favorite, but to each there own.

San Antonio

San Antonio is the big city with the little town feel. Unlike Houston, it is not dependent upon the oil business, which has resulted in some careful urban planning. Now the eighth biggest city in the United States, San Antonio is an up and coming city. Of the big cities in Texas, I would consider San Antonio the best overall.

Texas Real Estate

Overall, the good news is Texas real estate is very reasonably priced. The average home price in Dallas is $260,000, while Austin comes in around $200,000. A single family home in Houston will set you back $150,000 on average, while $220,000 will do the job in San Antonio.

The bad news with Texas real estate involves appreciation. Texas has the lowest real estate appreciation rate from September 2004 to October 2005. With an appreciation rate of a little over 5 percent, not everything is big in Texas. Still, this may be an opportunity to get in on the ground floor, particularly for a great town like Austin.

One would think Texas is a take it or leave it state, but it simply isn’t true. The cities are all unique and a lack of a state income tax makes the low real estate appreciation rates easier to swallow.

Article Source: http://www.articledashboard.com

Raynor James is with www.fsboamerica.org - FSBO homes for sale by owner. Visit our "sell my home" page at www.fsboamerica.org/seller.cfm to sell your home yourself with a free 1 month listing.

Texas Showcase Homes