Market value of home

When it comes to real estate, there are few things more important than equity. All of the advice given to first-time homebuyers centers on how much equity they are likely to build in the time they will be living in the home. Additionally, when it comes to getting a home equity loan or selling the house, knowing how much equity you have built up is quite important. It will determine how much cash you end up with. And that is no small consideration.

A Definition of Equity

Most of the time, equity refers to the amount of “ownership” you have in a particular piece of real estate. A set amount of cash is the main expression of the equity in your property. Equity is usually built by a combination of two things:

1. Making mortgage payments

2. Increases in the property’s value

The longer you have the real estate, and make payments on it, the more equity you are going to build up in the property. And if you live in an area where the home values are increasing, you will find that helps with your equity as well. This is the reason that the general advice is to buy only if you plan to stay in a home for at least five years. This gives the property time to appreciate, and it allows you the time to pay down some of your property loan’s principal.

Determining Your Real Estate’s Equity

It is usually very simple to figure out how much equity you have built in your real estate. First, you need to find out what the current market value of your home is. You can do this by talking to a variety of real estate agents, mortgage loan officers, and appraisers. Next, you subtract the amount that you still owe from the market value of your home. The result is your equity. Here’s an example:

You bought your home 11 years ago with a loan for $115,000. Now, however, the property at current market value is worth $135,000. And you have paid down some of your loan, still owing about $75,000. To figure your equity, you subtract the $75,000 from the $135,000 for a total of $60,000. This is about how much you could expect to pocket if you sold the home at current market value, or the amount of money you would have access to with a home equity line.

By: L. Sampson

I have been approached by a swarm of homeowners who are currently facing foreclosure. It saddens me to see so many people in this situation, and how they have been deceived into thinking they can afford these homes. Even until now I hear stories about homeowners being promised false hope that they can be saved from foreclosure by paying a short sale fee, loss mitigation fee, or just being striped totally of their equity by scrupulous professionals.

The fact of the matter is that you can save yourself from foreclosure; because you don’t have many options.
The first thing homeowners in trouble have to come to realization is to separate their emotional attachment to their home if they have owned it for less than four years. I say that because if you bought your home within the last four years most likely you bought really high priced and most of these homeowners bought with a 100% financing with no income verification. If this is the case you must realize you have no equity and your house isn’t worth keeping. What I recommend is a family meeting putting together a budget; net Income minus all expenses and if you’re in a negative forget it! cut your loses and move on its not too late to start over.

Refinance may be an option with the new FHA guidelines that go into affect October 1, 2008 this where homeowners that are behind on their mortgage can refinance only if they can prove that their income is sufficient to pay the mortgage at 29% of their income, and only if their current lender agrees to take a loss (short Pay) on the current mortgage FHA will purchase the current mortgage up to 85% of current Fair market value with closing cost and debt all bagged together not to exceed 90% of current fair market value. You can visit their website at http://www.hud.gov and search for the HR 3221 housing bill for full description of bill. Please remember this is a full documentation loan it will not work for people who cannot prove their incomes!

After you realize you can’t afford it and refinancing couldn’t help you call your lender don’t be afraid bottom line you can’t afford it. your lender must see that you can’t afford it so you have to lay the cards on table with them period give them all the truth once they see you can’t afford it obviously a payment plan won’t work. The lender may offer you loan re-modification if your income proves that you can pay the new loan terms so you see why I say sometimes its better to come to reality and forget the emotional attachment we have for homes. Most lenders offer forbearance which is deffer payments for up to six months but again if you still have the same income in six months it defeats the purpose.

Option 4 is to put the house on the market to sell at current market value hire a Realtor to give you a free market data analysis if you list with them most likely your home won’t be worth what you bought it for, so its important that you maintain communication with your lender during this process, so they can at least see that you are trying to get yourself out the hole, plus they will pause foreclosing procedures during this time. Once the Realtor gives you the market value send a copy to your lender as they have to agree to take a loss; this is called a short sale. During this time make sure you save your money to start looking for accommodations to move out don’t get too comfortable. It surprises me how many people wait til the sheriff is knocking on their doors before they reality actually hits home.

If after a few months the property doesn’t sell you have the right to claim Chapter 13 Bankruptcy. Just keep in mind that if you file chapter 13 its only temporary, if you can’t afford your current mortgage chapter 13 won’t help you as now you will have to pay your regular mortgage payment and all of your debt consolidated in another payment to the state trustee so now you will have two payments. Notwithstanding the enormous fees you will pay an attorney. Chapter 13 is for individuals who can prove they will be able to pay their current mortgage plus all arrears in a payment plan over 5 years.

If Chapter 13, Selling, Refinancing, short selling, forbearance, payment plan, loan re-modification, don’t work out for you just give it up ask your lender if they have cash for keys ask for a couple of months to move out and you will voluntarily give them the deed in lieu of foreclosure, it’s certainly less embarrassing than the sheriff forcing you and your family out.

Just remember during these tough times we fail to think straight and anyone who offers us a sign of hope will look like a god; but reality is you can save your own home if you just talk to your lender and come to realization if you can truly afford to keep this home even if the lender works with you.

I can’t stress to how important it is to communicate with the lender, they will offer the options that they will offer any body else you hire to do it for you. Don’t fall into a trap just tell your lender the exact truth be bold and un-embarrassed tough times could happen to any one of us and it’s never too late to start over. Take it from me I have walked the path and I have helped hundreds some I saved their homes and the others just gave them up gracefully and started a new chapter in their life.

After all is said and done just educate yourself on credit repair as your starting point.

http://www.approvemyfhaloan.com

By: Angel Gonzalez

Investing in commercial property can be a very self-sustaining and lucrative venture. Just like with residential real estate, you can have your tenants pay your mortgage bills for you. If you buy a larger building, often you can have several renters and your investment profits will be even greater. As you look into buying some commercial property, it will be important to get an appraisal of the fair market value of the purchase. This can be provided to you by a licensed appraiser, but it may also be helpful for you to know, how that commercial property market value is determined.

Calculating the value of a commercial property is not as simple as appraising the value of a residential home or apartment building. With residential properties, the value is determined by the condition of the home itself, compared with other homes with similar square footage and lot space in the same area. With a commercial property, the size and the condition of the actual building are still taken into account, including the state of things like the plumbing and heating and roof. But appraisers have to use other indicators to establish the value, because there are not usually many properties of exactly comparable size and location. Comparisons are still used in a general sense by investigating the costs of similar nearby buildings, but there are several other factors that are even more important in determining the market value.

One of the factors that most determine the worth is the market area of the property. Properties that are centrally located within the city limits with good transportation access will obviously be worth more than those that are located farther away from town and are harder to get to. This is because it is worth more to tenants to have their employees and suppliers nearby. A prime location is also valued higher because potential customers will pass the building regularly and have a greater chance of becoming real customers if it is in their normal path of travel.

Another very important aspect that determines the commercial property market value is the potential for rental income. If the building is well located, it will attract more tenants, making the property more valuable. If the building has several spaces for renters, it will be valued higher, because there will be several tenants to generate owner income. The ability to make more money from the property translates into a higher value (and price.)

Finally, commercial property market values are established by considering how many other properties of similar size, state, and income potential are available in the area. If there are plenty of comparable properties in the market, the value will be lower, but generally if a property offers more space or better location than most of the nearby buildings, it will be worth much more. This is because it will typically be able to attract tenants very easily.

While commercial property values are determined differently than residential properties, the contributing factors are easy to understand and look for. Knowing the way commercial properties are valued can help you in picking the best spot for your investment!

By: Andrew Stratton

Whether you are a relatively new real estate investor or an experienced real estate investor, if you want to become an expert on housing prices in your current real estate market, consider playing the following game. Over the years, I have had many people share a version of this game with me. It was formally taught to me by my real estate broker and then again by a real estate guru that I was a consulting client of. Before this, while I was growing up, my father and I played similar games as we looked at possible investments together.

Here’s how the game works: find someone that is also interested in real estate to partner up with and take a list of recently sold properties with you in the car. One person will be guessing. We’ll call him the guesser. The other person will be reading the property information to the guesser. We’ll call her the reader.

First, you drive to a house that recently sold and have the reader tell the guesser the information about the house: beds, baths, square footage, special features and everything else about the property EXCEPT the price. Then, the guesser needs to guess the price that the house sold for. Ideally, you want to be within a couple percent of the value.

The ultimate goal is for you to be able to drive down the street, see a house for sale and with some basic information about the house, give a reasonable estimate of what it will sell for in your current market. It may take a month to two or three of playing this game for you to get good enough to be able to do this and accurately guess 9 times out of 10 the correct sales price, but it is well worth the time to establish yourself as an expert on market values.

By: James Orr

Home appraisals, although used in many instances, are designed to determine the true market value of the property in consideration. Market value is how much the property is worth according to what type of property it is, what condition it is in, and other properties similar to it in the immediate area.

The only problem with home appraisals is that they can often differ greatly among different appraisers, the professionals who actually appraise the property. This is because an appraisal is just an opinion, based on market data, as to what the property is worth. So, you may get a higher figure from one appraiser and a lower number from another appraiser.

This can give lenders room to determine the market value for a property. For example, a lender could have his personal appraiser appraise the property for considerably less, based on the market data that the appraiser chooses to use, in order to decrease the loan amount that the lender can provide a home buyer. In turn, if a home owner is selling a home, the appraisal can be determined at a higher value so the owner will get as much for the house as possible. This “opinion” may not always reflect an accurate or true market value.

For this reason, if you are refinancing a home, selling, or buying, it is a good idea to find an appraiser, not related to any of the interested parties, such as buyer, seller or lender, in order to find the true market value of the property. This appraiser will have no tendencies to determine the appraisal in anyone’s favor. It is an even better idea to get two or three appraisals if you feel it is really necessary. This is also a great tool to show whoever may have just a ridiculous appraisal that it could not be what they say it is. It can be great proof to strengthen your case for the property.

It is really important to have a true market value of the property so the owner can get what it is worth, the buyer can get it at the market price, and also get the proper amount loaned to him or her. When the property is appraised at true market value, there is room for some negotiation and everyone knows they are getting a fair price.

So how do you find an appraiser? Well, you could use the seller’s, the lender’s, or the broker’s appraisal, but like I mentioned earlier, I would find an independent appraiser. You can look in the yellow pages under appraisal, search the Internet, ask trusted people such as family, friends and co-workers, who may have a fair person in mind. This is really just a way to protect you from getting a bad deal.

You should call a few appraisers to get quotes on how much is charged for an appraisal. Find a few that are within in your price range and make appointments for a walk through, or meeting to discuss the property. The appraisers should explain the data they are going to use to determine the value of the home. They should evaluate the number of bedrooms, bathrooms, condition, upgrades, whether there is a pool or spa, and of course the land it is on itself. They should also check at least three similar properties that have recently sold in that immediate area within the last three months, that are comparable to the property in consideration.

A true market value appraisal can save you money and get the loan you deserve, so be sure to do it right! It is worth it, especially if you feel the people you are working with wish to work in their own favor. There are many honest people out there, but there are also many who will do anything to get some more money in their pocket, especially in the real estate market. There have been know to be dishonest lenders and appraisers, after all, with an appraisal being simply an opinion, get it confirmed! This can only work in your favor.

By: John R. Blakefield

On first glance the home appeared cluttered and undecorated. I looked around for her ‘feature collection’ and concentrated on that. We redecorated the living room first, using things she already had on hand, even a swath of beige cloth she’d been planning to ‘make something with’ as a swag for the bay window.

“Wow, you have some terrific art!” Let’s put this all to work for you.

Her collection of Ansel Adams was strung throughout the house and offered a foundation for the home presentation. We began by collecting her seven bold black and white prints matted in white with black frames. White walls were in good condition and the beige carpet was an attractive backdrop. We moved the gray-beige patterned sofa set away from the wall and focused it on the fireplace. She brought out some pewter candlesticks and a collection of red glassware to add to the mantle, but first we hung two of the Adams prints above the mantle. On an adjacent wall, we hung three of the prints above a buffet table we moved in from the dining room to house the family’s game collection. A red table runner adorned the top of it and held a pair of rejuvenated lamps on either end. In the center, a red glass bowl held pinecones from her garden.

In an open corner, we stood a tall bookshelf, a red upholstered winged armchair, and hung the last two Adams prints in a vertical display to accent a reading corner. A small round table covered with a soft gray cloth and a piece of white lace held a red ginger jar lamp and a few small photos. Books elevated some photos, and an open book on one side of the table indicated someone liked to read.

A length of beige fabric in a small pattern swagged over the curtain rod and pooled on the floor on either side of the huge bay window. White mini-blinds were kept in place for light control, but the beige fabric offered a softer window surround.

Red and gray throw pillows and a deliciously warm red throw were added to the back of the pit group sofa for color and style. We centered a dark travel trunk with leather trim in the bay window area and added a few touches of red around the room with her glassware collection. Nothing else was needed.

Whether you live in the Denver Metro area or not, colors of the Rocky Mountains can Rock your World.

By: Dorine Verhoeff

In today’s car market often times many buyers and sellers especially dealers typically refer to the blue book value of a vehicle to determine if its being sold at a proper price. Generally with newer vehicles blue book is a very good reference for the price of the car and is often a bargaining tool when looking to do a trade in and get financing. However when buying a cheap used car especially for cash, the market value of the vehicle is much more important.

So what is the Market Value and how do we determine this? Simple, research and compare. Much like when buying a home and having a real-estate agent do comps to determine a homes value instead of purely going off the appraisal (which tends to be far off from the actual prices homes are being bought and sold at) cars are not different and the best part is you can do the comparisons easily by your self.

Auction sites can be a great way to get started as these involve multiple buyers actually bidding on the price of the vehicle. You can often review previous sales and that alone can be a great judge of the current market value of a vehicle.

Also just simply browsing a variety of classifieds to see what the average selling prices are (keep in mind just because some one is asking a certain price doesn’t mean anybody is buying at that price) the average selling price online can give you a good ball park number to start with whether you’re selling or buying a used car.

Ultimately the goal of this article is too help people find the vehicle they are looking for or sell a vehicle faster and at the right price. Often times I see sellers especially preaching the blue book value of a vehicle and this can sometimes be far more or far less than what the true market value of a vehicle is. So save yourself the headache do your homework and happy buying and selling.

By: Brian Ostrowiak

Americans keep track of the values of their stocks, IRAs, bank accounts and investments every day. However, many are unaware of the value on one of their largest investments – their own home. Are you aware of your home’s value in this declining market?

A Comparative Market Analysis, referred to as a CMA, can be provided by your local real estate professional to help you determine your current estimated home value. As the name suggests, a CMA will compare your home to similar properties in your market which have sold within a specific time period. A real estate professional might also use currently listed or pending homes to help find the current market conditions.

Comparable sales that are used in a CMA are properties that are most similar to your home. Real estate professionals will use the values from homes that have the same number of bedrooms, bathrooms, square footage, and features as your property. They will also factor in the condition, location, and age of the property to determine value.

This data, combined with the value of your property upgrades, will give you an accurate idea of what your home is worth in today’s market. Since the real estate market is constantly changing, your CMA is only valid for a short amount of time. It is a good idea to obtain a new Comparative Market Analysis each year to stay aware of your home’s value.

The CMA is the only market-based means of measuring value. When selling your home the CMA is crucial in making sure you are priced appropriately for the current market. A correct done CMA will help sellers price their home in line with market values which will produce a quicker sale.

Buyers need to have their agents do a CMA on the properties they would like to purchase. Doing a CMA prior to writing an offer helps the buyers determine how much they are willing to pay for a house. It also helps to determine if the house is a good deal for today’s market.

It is important to understand that a CMA is not an appraisal. Real Estate Agents can only provide an estimated value of your home. Only qualified appraisers can perform an appraisal on your property. The cost of obtaining an appraisal begins around $200.

There are many reasons to run a CMA – to determine a realistic picture of your net worth, determine a list price from your home, or to provide adequate replacement insurance. Whatever the reason, it is a free service offered by many real estate agents in your area. Requesting an updated Comparative Market Analysis will help you keep track of your home’s value in this turbulent real estate market.

By: Katie E Mitchell

First and foremost, you need the help of a real estate professional to get the correct market value for your home. Like the guys in Telluride Real Estate Corporation or those of Telluride Properties, a really professional real estate broker or agent can apprise you of the going rates for houses like yours in your area, even if these quotes periodically change. When they tell you, however, the market value, remember they have an idea of the house in mind, and if yours does not measure up to it, then the value will be lower. It is now up to you to raise the market value of your house to the optimum.

Next, property values can depreciate and this must be clear. If it is seedy-looking and uncared-for, with a lot of grass in the yard or leaves in the downspout, then the value will surely be a lot less. Ditto if it is located in an undesirable neighborhood, even if the house is made of A-1 materials. So make the necessary allowances for them in your asking price, or, if you want to raise your price, then obviously a few things should be done about the house you are selling.

Third, a house without problems sells higher. No dripping faucets, leaky roof, stuck-up window sills, worn carpet or malfunctioning water heater or radiator. Repairs are thus mandatory if you want a higher price. Count up also the garage transformed into an office or bedroom, as they add actual usable floor space to the house. Remember that repairs in the woodwork can be covered up with paint so that termite-eaten windowsill should be reworked and painted over. On the other hand, simply repairing it shows you are conscientious about maintaining the house in tip-top condition. The buyer who sees it will assume it is the same to all parts of the house.

Additions to the house also raise its value. Got a swimming pool? A deck or patio or lanai? Spruce them up and jack up your asking price. Spiffing up the yard does that as well. Trim the trees of deadwood, and mow the grass in the lawn. Rearrange the pots of plants in the property boundary line or plant new hedges along the fences. Make your house and your lawn great and your selling price will look great as well.

Last, there are the intangibles. A house that is part of history will decidedly sell higher, so make that a major selling point as well. Play up that part in history, no matter how minor and you got an edge.

Then remember that the amount the property appraiser is not the last word on what price your home may sell; it is only in fact a starting price. You can raise or lower that price by what you do or not do to your home before you market it. But then of course the final decision on how much to sell it is yours because you are also selling a part of your life and memories.

By: Connor R Sullivan

My profession in residential real estate is in a market comprised of Canton Ga homes for sale and most of the time when I work with buyers there seems to be a misunderstanding of using price-per-square-foot as a tool to compare homes and determine value. Buyers and even many Realtors simply take the price of a sold home, and divide it by the home’s square footage to arrive at the price-per-square-foot comparison value. Next they mistakenly use that calculation as the basis to compare all other homes.

Once I see buyers using this method, my explanation to them is always the same. That using such a method is inaccurate and wrong.

Here is the reason why…

Using a quick and easy example, House #1 sold for $200,000 with a square footage of 1200. Home #2 directly across the street sold for $230,000 with the same square footage of 1200. Both homes sold during the same week. Now that is a whopping $30,000 difference in price, yet both homes had the same 1200 square footage.

Using the above example for house #1 the buyer calculated a $167 square foot price ($200,000 divided by 1200). He calculated again for house #2 and derived a $192 square foot price. As you can see, it is erroneous to use price per square foot as a comparison tool.

Along with square footage, there are many other important factors that come into play when determining a home’s true market value. A 3-car garage over a 2-car garage can add $5,000 more to a home’s value. The difference between a composition roof versus a tile roof also adds $5,000 more in value.

Another important element is the number of bedrooms and baths. A difference in the number of bedrooms adds a $4,000 value for each additional bedroom. An extra bathroom increases a home’s market value by $2,000.

Other elements also impact market value. One home may have a tiny yard, yet another has half an acre. Or take the home that has $10,000 in professional landscaping, while a similar home has virtually no landscaping whatsoever. A home may have expensive hardwood flooring throughout, while others have bare basic carpet. View is an important consideration in value calculation. One home may have a beautiful mountain view while another home backs to a cement wall and a noisy shopping center.

Although a real estate broker is not normally a licensed appraiser, you can still look at the differences with your agent when comparing homes and pencil in adjustments to comparable home sold prices or even on homes you may be viewing to consider making an offer on. This method of making adjustments will help guide you into making a justified offer price, and present a level of comfort when doing so.

Each area across the country has different dollar adjustments applied to features that determine a home’s value. One way to learn this information for your particular area is to obtain a copy of a completed appraisal and study the value adjustments the appraiser gave to each feature. You may be able to get a copy from a friend or neighbor. Other ways are to talk to your real estate broker, one that is in tune to the calculations an appraiser uses. Better yet, if you have the opportunity, speak with an appraiser, and you could walk away with a goldmine of information.
An appraiser uses a form titled “Uniform Residential Appraisal Report” to complete an appraisal for a home purchase. It’s a detailed form with much information, but actually quite easy to read and understand.

Although it’s a six page form, you can learn a lot just by studying page two. An appraiser records detailed information on three comparable homes that have sold in the immediate neighborhood. There are three columns, with one column for each sold home. Inside a column are factors that give value to a home such as age, condition, number of baths and bedrooms, garage size, and if the home has a porch, patio or deck. There are many more areas of value, even a section to add value for a home’s view.

The appraiser takes all of the factors for the three sold homes and compares the results to the actual home being appraised. The sold homes have a huge bearing on the value of the subject property. The estimated opinion of market value for the home being appraised is derived by taking the sales price of each sold property, deducting or adding adjustments to that price, and ending with a final adjusted sales price for each comparable. The adjusted values determine the estimated market value of the subject property.

Using the common price per square foot method to determine a home’s value is bound to give erroneous information since it neglects to consider all of the other factors that can give a home extra value. It’s also important to remember that the best market value comes from using homes within the same neighborhood and for those have sold during the past six months. Homes on the same street as the subject property, or at least within half a mile, make the best comparables (comps), and more than likely are also what the appraiser will use to determine market value.

By: Maria Mekus