What’s Your Home Actually Worth?

What's Your Home Actually Worth?  What's your home is actually worth determining fair market value vs. appraised and assessed value and the factors used to determine fair market value.

It’s easy to know how much money you have in your savings account or the real-time value of your stock investments. But, determining what your home is actually worth is trickier.

As a seller, knowing what’s your home actually worth, helps you price it correctly when you put it up for sale. If you price it too high, it may sit on the market. But price it too low and you may be losing out on a good chunk of money (nobody wants that!). For buyers, it’s important to know a home’s worth before you make an offer. You want your offer to be competitive, but you don’t want to overpay for the property. 

As a current homeowner you might just be curious about the value of your home. Keeping track of what’s your home is actually worth year over year helps you understand the trends in your market. So when you are ready to sell, you can take advantage of a good window of opportunity. 

A trained real estate agent, who understands your particular neighborhood—can determine the true market value of your property … and at no cost to you!

THE THREE TYPES OF HOME VALUES 

When buying or selling a home, you’ll frequently hear the words appraised value, assessed value, and true market value. It’s important to know the difference between each one so you can make better, informed decisions. 

Appraised Value

A professional appraiser is in charge of determining the appraised value of a home. Lenders require appraisals when a buyer finances a property. And while the lender is the one requiring this information, the appraiser does not work for the lender.1 An appraiser is a licensed professional who is impartial to the buyer, seller, or lender—no matter who pays.

An appraised value assures the lender that the buyer is not overpaying for the property. For example, imagine a seller lists a home for $400,000. They reach a deal with the buyer to sell the home for $375,000. Should the appraised value come in at $325,000, the lender will not lend higher than the appraised value of $325,000.2

Appraisers will compare similar homes in your neighborhood. Evaluating, location, square footage, appliances, upgrades, improvements, and the interior and exterior of the home.  

Assessed Value

Your local municipal property assessor determines the assessed value of your home. This value matters when your county calculates property taxes each year. The lower your assessed value, the less property tax you’ll pay.3 

An assessor evaluates neighborhood homes sold, similar to the size of your home, age, overall condition, and improvements made. Assessors have limited information as they don’t have full access to your home. 

Annual assessments determine how much property tax you owe. Many counties use a multiplier (typically between 60%-80%) to calculate the final assessed value. When the assessor determines the value of the home is $300,000, and the county uses a 70% multiplier, the assessed value of the home would be $210,000 for tax purposes.4

If your assessed value isn’t as high as you envisioned, don’t sweat it. Many homeowners appeal their assessment in favor of a lower valuation so that they can save money on property taxes. Let us know if you want to appeal your property tax assessment. We offer complimentary assistance and would be happy to help you build your case.

True Market Value

Real Estate agents establish true market value. It basically refers to the value that a buyer is willing to pay for the property. A expert real estate agent determines true market value because they have hands-on experience buying and selling properties. They understand what buyers want in your market and know what they’ll pay for a desirable house, townhouse, or condo.

For sellers knowing the true market value importance helps you choose how much to list your property for. It also helps you know any improvements needed to your home before putting it on the market. Your agent can help determine which updates and upgrades will have the biggest impact on your true market value.

WHAT’S THE DEAL WITH ONLINE CALCULATORS? 

You may be looking for answers from Zillow, Redfin, and Trulia to learn what your home is actually worth? When you use an online calculator to determine your home’s value on these sites, it is just an estimate. These sites use their own algorithms for coming up with their estimates. Zillow comes up with “Zestimates” by calculating “public and user submitted data, calculating special features, location, and market conditions.”

Online estimates can be a great starting point to a conversation with your real estate agent about your home’s worth. Zillow recommends that you use a real estate agent for coming up with the actual market value of your home. The site that after you get a “Zestimate,” you should get “a comparative market analysis from a real estate agent.”

It’s essential to have an agent involved in the process because they understand the market better than a computer ever could. They show properties in your city daily, and they know the particular preferences of buyers and sellers in the area. Young professionals, large families, empty nesters, and other groups are all looking for different things in a home. A local agent has buyers, they understand what every buyer segment in your market is specifically looking for. 

HOW AN AGENT FINDS YOUR HOME’S TRUE MARKET VALUE

So, how does an actual real estate agent determine true market value to determine what your home is actually worth? They’ll start by doing a comparative market analysis (CMA). This means they’ll compare your home’s features to similar properties in your area. For the CMA, the agent looks at the below factors to influence their assessment of your home’s worth:

  • Neighborhood sales – Your agent factor recently sold homes prices and what they have in common with your house. 
  • The exterior – How does the house look when walking or driving?
  • The interior – This is everything inside the walls of the house. Square footage, number of bedrooms and bathrooms, appliances, and more all influence the overall market value.
  • Age of the home – A newer or older home affects the list price as part of their assessment. 
  • Style of the home – The style of your home is important because buyers in different markets have different tastes. If buyers prefer ranch-style homes and you have one, then your home may sell for a premium (aka more money!). 
  • Market trends – An experienced agent knows your area’s trends and what buyers are willing to pay for a similar home. 
  • Location, location, location – This one’s probably the most obvious. Your agent will think about how popular the area is, how safe it is, and what schools are like. 

A computer algorithm simply can’t take all of these factors into account when calculating the value of your home. Nothing beats having a real estate agent or professional appraiser when it comes to determining a home’s true market value.

YOUR AGENT IS THERE EVERY STEP OF THE WAY

Determining a home’s true market value is a real estate agent’s forte. For seller’s, your agent will help determine your home’s market value so you can list it at the right price. 

For buyers, your agent will help you determine the value for a fair offer and you don’t pay too much. They will set you up with an email search from the Multiple Listing Service of homes that meet your criteria. It will show what homes are available within your criteria and their pricing. 

Get a Complimentary Report With Your Home’s True Market Value

Curious about your home’s true market value? Call us or fill out the form below to request a free, no-obligation Comparative Market Analysis to find out exactly how much your home is worth!

Sources:

  1. Chicago Tribune –https://www.chicagotribune.com/suburbs/chi-ugc-article-what-is-the-difference-between-market-value-a-2013-09-30-story.html
  1. SFGATE – https://homeguides.sfgate.com/market-value-vs-appraised-value-1206.html
  1. ValuePenguin – https://www.valuepenguin.com/mortgages/what-is-the-assessed-value-of-a-house
  1. Movoto – https://www.movoto.com/blog/homeownership/assessed-value-vs-market-value/
  1. Zillow – https://www.zillow.com/how-much-is-my-home-worth/
  1. Realtor.com – https://www.realtor.com/advice/sell/assessed-value-vs-market-value-difference/

How to Save Money on Insurance and Other Important Answers To Questions

Have you ever wondered how to save money on your insurance, is your family growing and changing? Is you’re home based business or home improvement insured to the fullest? In Todays Business spotlight, Rich Seymour Owner of Rich Seymour Agency – Farmers Insurance in Westminster is going to share his expertise answering some important questions you may not have thought of.

1. How long you’ve been in business?

2. Who is the perfect client that you can help with your services?

3. What separates you from other insurance agents?

4. What coverage should families that are growing and changing consider?

5. If I were remodeling or doing an addition to my home what considerations should I be thinking about?

6. What coverage do I need for my home-based business?

7. During these uncertain times how can I save money on my insurance?

If you would like to be in a Business Spotlight, please don’t hesitate to reach out to Johanna-303-217-3821 or johannawells@kw.com.

Looking for insurance help? Please reach out to:

Rich Seymour Agency-Farmers Insurance 9100 W 100th Ave Ste 7, Westminster, CO 80021 Phone: (303) 421-7424 #theguyonthecorner Website: https://agents.farmers.com/co/westminster/richard-seymour?SourceID=AMPALFGMAG&utm_source=GMB&utm_medium=Local

Homeownership Resolutions for 2021

The start of a new year always compels people to take a fresh look at their goals, from health and career to relationships and finance. But with historically low mortgage rates, increased home sales and price growth, and a tight housing inventory, the time is right to also make some homeownership resolutions for 2021. Check out how to discover key action steps to take to achieve your homeownership goals this year, whether you’re a home buyer, home seller, or a homeowner not yet planning on moving.

The New Normal: A Strong Housing Market Expected to Continue into 2021

“2020 will be known for a lot of things, and a record-breaking year for real estate will certainly be one of its more unexpected legacies,” prominent economist Daryl Fairweather said.1 And he’s right: most of us would have expected the housing market to suffer from circumstances like a once-in-a-hundred-years pandemic and historic inventory shortages. 

But, rather than a slowdown, we are continuing to experience a surprisingly robust real estate market across the country. And experts estimate that these conditions are likely to last well into the new year. Fannie Mae Senior VP and Chief Economist Doug Duncan predicts that existing home sales will ultimately “be up a percent or more in 2021.” He believes home prices will continue to rise due to limited inventory, but he is confident the Federal Reserve will keep interest rates low into the future, which will be “very good for households.”2

Market conditions like fewer available listings, changing criteria for desired homes, and record-low mortgage rates are changing the way people buy and sell homes, most likely in a lasting way. But this sustained activity, even in the uncertainty that is 2020, proves that our country still views real estate as a sound investment. The only question now is how you can take advantage of the housing market’s “new normal.” 

FEWER LISTINGS EQUALS A SELLER’S MARKET

Inventory, meaning the number of homes for sale, is at a record low across the country. The National Association of Realtors (NAR) reports there are fewer homes on the market today than the association has seen in data going all the way back to 1982.3 Currently, the total housing inventory is about 1.47 million units, which is a decline of 19.2% from one year ago.4

Experts do predict some relief on the horizon. MarketWatch had previously anticipated housing starts would occur at a pace of 1.45 million and building permits would come in at a pace of 1.52 million.5 But it turns out that the market exceeded expectations: compared with last year, housing starts are up 11% and permitting for new homes occurred at a seasonally-adjusted annual rate of 1.55 million. That represents a 5% increase from August and an 8% increase from a year ago.

For now, the fact that there are fewer listings creates an advantageous housing market for sellers. There are several reasons why. 

For one, buyers have to act fast to snap up available homes. As a result, most properties that come on the market stay for an average of just 21 days before they are sold.6 “That is the fastest ever recorded in our monthly series,” says NAR Chief Economist Lawrence Yun.

Another benefit is that sellers are enjoying higher net returns on their listings. This is thanks to the tough competition for homes, which often results in bidding wars between buyers. Nationwide, the median home price in September rose to $311,800. That translates to about $40,000 (15%) more than just a year ago.7 

This seller’s market is not simply a product of the pandemic. In fact, in the country’s top 100 metro markets, inventory has been dwindling since the first quarter of 2020.8 This means that even with increased construction, buyers can’t simply wait for things to go back to normal before reentering the market. Rather, all signs indicate that this is the new normal.

What It Means for Homeowners: 

These higher home prices show that buyers are willing to spend more on a home right now than they did last year. So, if there ever were a time to list for top dollar—and expect to receive asking price quickly—that time is now. Ask us for a free consultation of your home’s value today.

What It Means for Homebuyers:

Due to low inventory, buyers could easily find themselves in a bidding war. Time is of the essence in a seller’s market, so you’ll need to get your financing in order and be preapproved for a loan before you begin your home search. We can connect you with a trusted mortgage professional to get you started.

BUYERS BENEFIT FROM LOW MORTGAGE RATES AND A BIGGER PLAYING FIELD

Don’t worry, homebuyers. This “new normal” of real estate has benefits for you too. 

For example, people used to base their next home purchase on how far the commute was to work or in which public school district it was. But now, thanks to the pandemic shifting the locus of jobs and work, they are free to consider what they need from a home to make it a place they truly want to be in as they work, teach, exercise, cook, and live.

Often, this equates to needing more space in different types of areas. Realtor.com consumer surveys show that people are desiring quieter neighborhoods, home offices, updated kitchens, and access to the great outdoors.9 The search for these criteria is driving residents out of densely populated metropolitan areas and into the suburbs.10 And this exodus from cities is good news for buyers: it opens up more possibilities for inventory that they could not have considered pre-pandemic. 

Another advantage for buyers is the record-low mortgage rates. The average rate for a 30-year fixed-rate mortgage hit a record low in mid-October when rates fell to 2.81%. That’s the lowest since Freddie Mac began conducting the survey in 1971, and well below last year’s 3.69%.11 Similarly, a 15-year fixed-rate mortgage can be had for as low as 2.35% compared to 3.15% a year ago.

Thanks to these rates, buyers are afforded the opportunity to buy nearly $32,000 more home than they could one year ago, while keeping their monthly payment the same.12 So even though home prices are high now, it is currently more affordable to buy a home now than it was last year.

If you want to take advantage of these rock-bottom mortgage rates, you need to act fast. Though rates are projected to stay low, housing economists predict that the window of opportunity to get the best rate could be closing in the coming months. Mike Fratantoni, chief economist at the Mortgage Bankers Association, said he expects the average rate on a 30-year mortgage to rise to 3.5% by the end of 2021.13

What It Means for Homeowners:

Record-low mortgage rates offer you the opportunity to lower your monthly payment—or even take out some equity—with a refinance. With those additional funds, you could even choose to invest in a second home in a new desirable location. Reach out to us for a referral to a trusted mortgage professional or an agent in those markets. 

What It Means for Homebuyers:

The time is now to determine how much home you can comfortably afford and make a plan to find it. We can set up a search for you to find homes that best meet your new needs, even if they’re in neighborhoods you wouldn’t have considered before.

A RECORD-SETTING YEAR FOR HOME SALES IS JUST THE BEGINNING

Despite the seemingly adverse buyer conditions, 2020 experienced a 14-year high number of home sales, NAR reports. Existing-home sales, which include single-family homes, townhomes, condominiums and co-ops, rose 9.4% in September to a seasonally adjusted annual rate of 6.54 million.14 That’s a 21% increase from a year ago! 

Every region of the country has seen a surge in sales activity. According to George Ratiu, senior economist for Realtor.com, part of the reason for these continued sales is that the pandemic has created a paradigm shift in the patterns of real estate.15 For example, housing needs are typically resolved by late summer and early fall to coincide with the commencement of the new school year. With homeschooling and remote work, however, buyers have been freed to continue their home search into the traditionally slow winter months.

Another reason for the robust market is that Millennials are finally putting their money into homeownership. According to the U.S. Census Bureau, the homeownership rate for 25-to-34-year-olds rose to 40.7% by the end of last year.16 This is significant because Millennials, the generation of people in their mid-20s to late-30s, currently surpasses Baby Boomers as the nation’s largest living adult generation. As the remaining percentage of this group starts investing in homes in the near future, demand will persist.

All of these factors indicate that the housing market is poised to remain strong as we head into the new year. And as Jonathan Woloshin, head of U.S. real estate at UBS Global Wealth Management, believes, they could “buoy the housing market for years to come.”17 

What It Means for Homeowners:

It’s tempting to believe that homes will basically sell themselves in a market like this. But we’re still seeing properties that are overpriced and under-marketed sit unsold. We can help you optimize the process of selling your home so you can get the best possible offer.

What It Means for Homebuyers:

Preparation is key to success in a seller’s market like this, but don’t let yourself become paralyzed. We are here to answer your questions and offer sound advice to guide you through all the options that are available to you.

REAL ESTATE IS A SAFE BET

Your other investments might have been on roller coasters this year, but the real estate market has been steady, competitive, and strong throughout. That makes it a good choice for your financial future.

National real estate numbers can give us a pulse on the market, but real estate happens in our own backyard. As your local market experts, we can help you understand the finer points of the market that impact sales and home values in your own neighborhood. 

If you’re considering buying or selling a home before the new year or in early 2021, contact us now to schedule a free consultation. We’ll work with you to develop an actionable plan to meet your goals.

Johanna Wells Real Estate

Sources:

  1. Redfin –
    https://www.redfin.com/news/housing-market-news-september-2020/
  2. Housing Wire – 
  1. CNBC – 
https://www.cnbc.com/2020/10/22/september-existing-home-sales-jump-9point5percent.html
  1. NAHB – 
http://eyeonhousing.org/2020/10/existing-home-sales-surge-despite-record-low-supply
  1. MarketWatch – 
https://www.marketwatch.com/story/new-home-construction-slows-slightly-in-august-driven-by-pullback-in-multifamily-starts-2020-09-17
  1. National Association of Realtors – 
https://www.nar.realtor/newsroom/existing-home-sales-soar-9-4-to-6-5-million-in-september
  1. Business Insider – https://www.businessinsider.com/how-2020-broke-the-housing-market-inventory-could-run-out-2020-9
  2. Forbes –
https://www.forbes.com/sites/petertaylor/2020/10/11/covid-19-has-changed-the-housing-market-forever-heres-where-americans-are-moving-and-why/#74e7355761fe
  1. Realtor.com –
    https://www.realtor.com/research/top-consumer-home-features-coronavirus/ 
  2. Wealth Advisor – https://www.thewealthadvisor.com/article/covid-19-has-changed-housing-market-forever-heres-where-americans-are-moving-and-why
  3. Washington Post –
https://www.washingtonpost.com/business/2020/10/15/30-year-mortgage-rate-drops-record-low/
  1. Forbes – 
https://www.forbes.com/advisor/mortgages/buying-a-home-low-mortgage-rates/
  1. BankRate – 
https://www.bankrate.com/mortgages/refinance-window-could-close-soon/
  1. National Association of Realtors – 
https://www.nar.realtor/newsroom/existing-home-sales-soar-9-4-to-6-5-million-in-september
  1. Forbes –
https://www.forbes.com/sites/petertaylor/2020/10/11/covid-19-has-changed-the-housing-market-forever-heres-where-americans-are-moving-and-why/#74e7355761fe
  1. TD Economics – 
https://economics.td.com/us-falling-mortgage#:~:text=The%20homeownership%20rate%20among%20millennials,47.7%25%20at%20a%20comparable%20age.&text=This%20means%20that%201.4%20million,that%20of%20the%20older%20generation
  1. Axios Media –
https://www.axios.com/real-estate-market-819e3c85-3765-4014-91c0-b545be6d5935.html