What Is My House Worth Anyway In Today’S Tough Real Estate Market?

Short answer: it depends if you’re talking to a prospective buyer, a real estate agent, or your insurance carrier’

 

Homeowners have since time immemorial tried to figure out what their home’s value truly is in their local market’ Websites like Zillow, Cyberhomes, and others all try to give an approximate opinion taking various bits of data into account such as previously sold homes’ If you are looking for a ‘true’ value on your home though the only opinion that truly matters is what will a retail buyer be willing to pay for your house in a relatively short (say 60 days maximum) period of time’

 

It’s tough to qualify for mortgage loans today

 

Because of loose underwriting standards and skyrocketing home prices of the early years of this decade (say from 2001 to 2006) the foreclosure crisis was born’ When sellers sat in the driver’s seat and buyers were making multiple bids per day the situation was favorable for those looking to sell a house fast’ Many buyers were afraid that they would get outbid, so they offered ever-increasing amounts of money for the home of their dreams house value estimate

 

But, like most dreams, the real estate bull market has now ended and home sellers are facing a reality that is not nearly so friendly as they might have hoped for’

 

How to compute fair market value today

 

A short rule of thumb used by many real estate professionals is to take Zillow’s or Cyberhome’s estimates and knock of 10% to 20% from this figure’ This gives a rough starting point for what a home buyer is likely to offer in today’s market’ It’s by no means an authoritative opinion, but it will help you get an idea of your home’s approximate value should you consider selling it’

 

Bank owned foreclosures (REOs) are weighing down the market

 

Millions of homes in the United States have been lost to foreclosure (or soon will be) because of the owner’s inability to pay the mortgage’ This unfortunate situation has resulted in a host of problems faced by communities all across the country such as neglected homes, vandalized homes, community blight, and much more’ It has created a positive environment for those home buyers with good jobs and good credit, but this is one of the few bright sides to the housing and credit crises affecting America’

 

Some home appraisal terms you should know:

 

Asking price – what the seller thinks the house is worth’ Usually known as the listing price’

 

Purchase Offer price – what the buyer thinks the house of worth’ Often will be significantly lower than the asking or list price’

 

Fair Market Value (FMV) – the price that the seller and buyer eventually agree upon’ Also known as ‘market value’’

 

Comparable Market Analysis (CMA) – what a real estate agent gives the seller to come up with the asking price’

 

Broker’s Price Opinion (BPO) – an estimate created for a lender (sometimes a third party or court will ask for this too) by an experienced broker in a given area’

 

Appraisal – usually performed by a licensed appraiser who takes the property’s unique characteristics into account to come up with a document that supposedly is based on objective standards’

 

Tax Assessor’s Value – this number is used by the local government to come up with a basis for property tax assessments’ This number is usually well below the market value, and if it is higher than the market value then a property owner can apply for re-assessment to reduce annual taxes owed’

 

Insurance value – how much the home is insured for should it be destroyed by fire or other accident’ Some policies provide amounts to rebuild the house, others only will pay a certain amount towards repairs’ For old or custom houses the replacement cost can far exceed the cost to rebuild a similar sized home with modern materials and less intricate construction’