Whether you hope to sell your property, refinance it, or build equity, it can be important for you to know your property’s value. But that’s easier said than done. The real estate market can be challenging to navigate.
Difference Between Cost, Price, and Value
No, they’re not all the same thing. Cost describes the actual spending on both materials and labor to build a property, and price is simply the amount of money someone pays for the property. Cost and price certainly impact value, but they do not determine it. There are a number of other market factors that contribute to the value of a property.
How is Property Value Determined?
Most of the time, real estate agents and professional appraisers calculate property value by analyzing the recent sale values of comparable properties, or comps. This isn’t as simple as just comparing the sale values of all the properties surrounding your property. To use the comp evaluation approach correctly, there are a few specific steps you need to take:
- Get accurate information. You can get property data from a variety of sources, but some sources are more accurate than others.
- Register of Deeds (Recorder’s Office) — Your county Register of Deeds can share information about the property’s current owner and purchase date. They can also tell you about liens against the property. However, the Register of Deeds cannot accurately supply the price paid by the current owner.
- Tax Assessor — Tax Assessors determine a property value for the yearly tax bill. However, this value is rarely a true representation of property value because of tax exemptions and incentives.
- Multiple Listing Service (MLS) — The MLS is the most comprehensive and accurate source of property information. MLS users can find the property’s final sales price, original listing price, information about any seller concessions, and details about square footage, bedrooms, bathrooms, and more. Unfortunately, only licensed real estate professionals can use the service.
- Choose at least 3 valid comps. Each comp must have been sold in the last 6 months and be located within 2 miles of your property. Your comps and your property should also share similar neighborhoods, demographics, property type, size, condition, construction, upgrades, and number of levels, bathrooms, and bedrooms.
- Adjust for differences. After you’ve chosen at least 3 valid comps, make adjustments based on the differences between your property and the comps. For example, add value to a comp if it has more bedrooms than your property and subtract value if its features are outdated.
- Compare & determine value range. You can be confident that your property’s value lies somewhere between the values of your lowest and highest comps.
Property Valuation Resources
Whether you try to do the calculations yourself or ask your real estate agent for help, there are a variety of resources you can use for property valuation.
- Online valuation tools. Organizations like Zillow and Redfin have tools that can provide property value estimates. However, these rough estimates don’t take into consideration special factors, like renovations, repairs, and other unique features.
- Your local real estate agent. Real estate agents can complete a Comparative Market Analysis (CMA). This analysis dives far deeper into the property features overlooked by online valuations. Network Real Estate agents can research your property and give you a free CMA. Then, they can help you sell your home competitively.
- Professional appraiser. Appraisers provide impartial, thoroughly researched property value estimates for a few hundred dollars. This should not be confused with a home inspection, during which an inspector determines if your property is structurally sound enough to sell.
- Evaluate your own comps. Although you may want to try calculating your property’s value on your own, this is easier said than done. You may struggle to find accurate information. After all, only licensed real estate agents can access the MLS. However, you can do your own analysis based on structural components, neighborhood, location, listing price, actual price, and other feature information you can find online.
Looking to sell your property in Wilmington, Carolina Beach, or Kure Beach? Talk to your Network Real Estate agent. We know better than anyone what sells a home. Your Realtor can recommend improvements, a home stager, or even just provide some simple tips to ensure your Wilmington area home is sold for top dollar.