Whether you are trying to estimate your current property’s value or determine if a potential new home is priced fairly (but aren’t quite ready to consult with a realtor), here are some tips for estimating it yourself.
The first, and most important step, is to look for comparable properties in the same area. Try to find places with similar features such as square footage, number of bedrooms and bathrooms, and the neighborhood. The more similar a property is to yours, the better the comparison.
While researching the properties that are on the market is helpful for knowing the competition pricing, the most accurate gauge is the final sale price for the homes that recently closed. If you don’t have access to the Multiple Listing Service (MLS), a system which realtors use to post and search for property listings that generally isn’t free to the public, you can check for the information on websites such as ilfls.com or probidder.com Even though these websites are updated regularly, it is important to remember that they may not be as complete or as accurate as the MLS. They also may not have as much information regarding foreclosure sales and bank-owned properties, which often sell for much lower prices than market value.
Once you have a list of at least three properties comparable to yours, line up their features side-by-side. Some comparisons you might want to consider are: number of rooms, the condition of the appliances and mechanicals (HVAC system, electrical, etc), whether or not there have been renovations, if there is a garage or other type of parking included in the price, and the school district. If a comparable home has something yours doesn’t such as all stainless steel kitchen appliances or a renovated bathroom, you should subtract value. However, when your house has something another property doesn’t, such as a finished basement, you may add value.
If after your research your property does not have the value you hoped it would, you can step back and assess the situation. What do the houses in your desired price range have that yours doesn’t? How can you change your home most effectively to add value? Looking at the comparisons, you should be able to find your answers.
On the other hand, what if you are a homebuyer and your research shows that the property asking price is too high? If you decide to present an offer lower than their asking price, you can present your comparisons and make the case why you believe the offer is fair which could help sway the seller.
Even with a lot of research, if you are not a licensed realtor or appraiser, it’s important to remember that your valuation may still be different than a professional’s opinion. For example, realtors have access to more information about recent home sales in the area and have probably even toured many of them with their clients so they have firsthand knowledge of the competition. And even a realtor’s professional opinion is not the actual appraised value—though they often come up with the same value, it is possible for them to differ. If the two numbers do differ, the professional appraisal is the final answer when it comes to valuation. But the more research everyone does, the less likely it is that this will happen.