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Click Here for Real Estate Secrets for Selling Your Home
If your plans are to use an Agent to sell your house, the
easiest way of determining value is through a Comparable Market Analysis--a CMA--which
the Agent will develop for you. If you plan on selling your house on your own, and do not want to deal with Agents
(who, in many cases will develop a CMA for you in the hope of getting your future business), the easiest way is
to have a professional appraisal done on your home. If you have a lot of time on your hands, and if Deed Recordings
are publicly available in your locality, you can also search for all properties sold in the last year or so that
are similar to your house.
Depending on the size of your house and your location, a professional appraisal should cost somewhere in the $350
to $500 range. For your investment, you will get a complete analysis of the estimated value of your home. Factors
such as condition, proximity to services, and overall neighborhood values all will all be taken into account. There
are three general approaches to determining the value: the cost (or replacement) approach, the comparison approach, and
the income approach. (Unless your property is commercial or a rental property, the income approach
will not apply). In the cost/replacement approach, a determination is made as to what the cost would be to replace
(rebuild) your home in today's market. In the comparison approach, the appraiser will, as in a CMA, determine what
comparable properties have sold for in the last 6 months to a year. This approach will directly compare your house
to these other properties, adding to value for special items that your house has, or deducting value for items
that your house lacks (in relation to the comparables). In all likelihood, this comparison approach will give you
the most accurate estimation of the worth of your house.
If I pay for an appraisal now, will the buyer be
able to use it? A couple of factors will determine
whether or not a buyer can take advantage of your appraisal. The most important lies with the policy of the lender
which will be handling the buyer's financing. It is completely within the lender's rights (and more than likely)
that they will want to order a new appraisal. In addition, there is the question of timeliness. If you have a professional
appraisal done now and it takes 4 months to get a contract on your house, it is probable that the lender will require
a more recent appraisal.
Is the value locked in stone? Absolutely not. An appraisal, no matter how scientific, still ends up being
the professional opinion of the appraiser. The appraiser must compare, for example, the condition of your house
in relation to the comparable properties, which to some degree is a judgment call. Nevertheless, an appraisal will
give you a reasonably good idea where your house fits in relation to recently sold properties. From that point
you are well on your way to setting a fair price.
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