“Beauty is in the eye of the beholder.”
“The value of something is what a buyer is willing to pay.”
Below is the process that I use to help a buyer or seller understand the market value of a property. Home purchases that use a loan will be subject to an appraisal. That requires us to find recent sales of similar homes to validate a value.
1. Location, Location, and Location: Stay as close as you can to the home to find comparable properties
2. Date of Sale. An appraiser likely will use comparable sales within the last 90 days. If there are not any comparable sales in that time frame, you can go back in time for a reference, but an appraiser may not be allowed to count anything sold past 180 days
3. Home Type: Be consistent between Single Family, Townhome, or Condominium
4. Approximate Size +/- about 10% of above-grade square footage is a good range to use. Dollar per square foot varies greatly as you consider much smaller or larger homes in the process.
5. Basements are worth approximately 25% / sqft as above-grade sqft. Fewer people enjoy sleeping or working in a basement. However, basements add functionality, so they can help a smaller, older home sell faster than one without.
6. Are there negative impacts for this property that are different from those of comparable homes? Examples are: Does this home face a busy road or not have a usable backyard?
7. Narrow down to the most similar levels of finish.
8. Add or subtract corrections for above-grade square footage, number of bedrooms, bathrooms, and garage spaces.
9. Average the corrected home values to come up with a valuation.
10. Review the final list and make a subjective decision based on feel, flow, how the space lives, and design taste.
Sellers:
11. Discuss, sleep on it, discuss, watch recent market activity, and tour competition until the Sellers and Agent have clarity. This confidence will help you not doubt yourself during negotiations.
*I am not an appraiser. This process is based on my 20 years experience helping buyers and sellers negotiate. If you would like to speak with a licensed appraiser, let me know and I can send you a few names.
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