When I determining your Real Estate Home Value I use 4 tools. I start with the Market Intelligence Report and Market Price Report for your review. The next step we need to check what homes sold for in the Multiple Listing Service along with Realtor Property Resource (RPR) and factor in the Market Analysis using the Price Driven Approach. This report relies on the data from homes sold in your neighborhood and surrounding area. Next, we will check what those homes sold for and compare the sale price to the AVM. Automated Valuation Model is a real estate property valuations using mathematical modelling combined with a database. I look for pricing patterns taking the AMV and the actual sales price to confirm our Price Driven Approach.
Lastly , we look at the Value Driven Approach
Next we need to filter and Appraiser’s opinion they could have about value, and look at the property through their eyes. Part of their mathematical modeling is a condition rating system and depending on the condition and improvements will move the value up or down. Keep in mind, most Real Estate Agents don’t use this approach. A lot of the agents were licensed after 2011, and majority of the home bought and sold were before the crash, so this information it does matter.
Terms to understand for Price Driven Approach
Public Record Data : AVM- Automated valuation model (AVM) is the name given to a service that can providereal estate property valuations using mathematical modelling combined with a database. Most AVMs calculate a property’s value at a specific point in time by analyzing values of comparable properties. (Example: October of 2016 to October 2017 for 2018 Values) Used public data only in their algorithm calculations.
Realtors Property Resource is a separate reporting system and most agent don’t use it unfortunately. RVM uses public data and the multiple listing service data in their algorithm calculations. It will also give an AVM and RVM confidence score in the report.
Price Driven Approach
I was watching a documentary on Warren Buffett and his approach to business. Seeing he is in the Real Estate Brokerage business I was curious and watched. Throughout the documentary, he had the same message…” Price is what you pay, Value is what you get”
When you compare prices from sold properties and using data just from the Multiple Listing Service, I call this Price Driven Approach. To me this is an inferior and outdated approach. Most Seller fell their home is better than anything else on the market and sometime price their home based on emotion. If I’m going to fight for your position, I need to base it on fact and this is part one.
No two homes are EXACTLY the same. There are two parts to Value.
Part one – Looking at the property through the eyes of an appraiser. What information will they need to decide the condition rating of the property. What does the home have the other homes didn’t that can change the value. Is the basement finished, basement full bath vs half bath or no bath at all, has the following been updated; kitchen, baths, windows, roof, and mechanical and so on.
Part Two – What value do you see.
Does the home has everything you are looking for and is it move in condition. Do you want something that needs work for some sweat equity? Some of the improvements made on the home makes it easier to sell doesn’t add value to the property. Sellers usually start their price more on the emotional side and overtime logic steps in. Usually when buyers start their looking phase they are logical due to pricing and move toward emotion after they find the ONE. My job is to filter out the emotion and look at the big picture logically so when you put in the offer you either feel comfortable with the price they are asking or you don’t. If you don’t agree, I need to share with the agent and the seller how you came up with that number you want to offer, logically. I set the pace for exactly what an appraiser is going to do.
What does an Appraiser Do?
An appraiser like us will start with sold price + or – condition and improvement + or – differences from the sold properties = value. The condition code will actually change the formula used to decide value. There is a 2nd underwriting system that verifies all condition codes the appraiser uses for each address they used in the appraisal that sold. Part of the condition rating equation will be improvements ; Roof, Windows, Kitchen, Bath(s), mechanical, and maintenance. Know come the dollar part of VALUE if; a home has finished basements or not, larger or small lot size, square footage, more or less bathrooms, garage size, daylight basement, walkout basement, are some example of actually adding or subtracting a dollar value from an appraisal. If you curious and want to know more about value and appraisal changes….
I recommend as part of your interview process you ask question and find out what tools they use before you make a commitment to see houses or sign a contract with an agent. No two homes are alike and why should your approach. My goal for each of my clients is success based on facts up front. They’ve done their homework and now it’s time to find their dream home and enjoy the process until they find the ONE that feels like home.
Market Intelligence Report
Get your Real Estate Market the Statistics with Market Intelligence Report, which demonstrates the economic forces effecting the market. The Pricing Analysis will show a better understanding how your property fits into the market . We can get you up-to-date data on the latest market trends and how that effects your bottom-line.
Is It the Right Time to Sell?
Not sure if this is a good time to sell? Wonder how much you could get for your home? Let us create a comparative market analysis and Market Intelligence report for your home to answer those questions and more.
Find My Perfect Home
Website Development, Production and Content by Pam Sawyer @ Team Tag It Sold © 2017 All Rights Reserved