Home Buying in Bellevue>Question Details

Vr, Home Buyer in Mountain View, CA

How to determine true worth of a property?

Asked by Vr, Mountain View, CA Tue Dec 6, 2011

What are good ways to find out what a property is really worth? We trust our real estate agent, but we want someone else's opinion before we start bidding to maximize our chances to get the house at the right price. Are there agents/brokers who can provide one time service in this matter. There's not enough sales data available for recent sales in the neighborhood or other houses on the market.

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Debra (Debbie) Rose’s answer
I ditto what Dan and Mack have already said.

To answer your specific question in regard to bringing in another agent/person, prior to making anoffer, to give a 2nd price opinion - that is not typically done.

Certainly, you wouldn't want to pay hundreds of dollars for an appraier to come in now.............that will be done once you have a signed agreement, as part of the mortgage process, so you can get the reassurance you are seeking then. it's a safety net for you.

No other agent will come in at this point, either.........it's just not done.

Trust your agent.....come up with a price range you are comfortable with, and that you and your agent believe is fair... make an offer.......then negotiate!
There is no "right price", per se, other than the one you are willing to pay... and the seller is willing to accept!

Best wishes....
2 votes Thank Flag Link Tue Dec 6, 2011
To amplify what Dan said so elegantly, "true worth" is what we insiders call "fair market value," and it is the price that a willing buyer and seller in an arms-length transaction without duress agree upon.

What appraisers are asked to do, and what you're asking too, is - what would somebody else pay for the property? The answer is - nobody knows for certain.

Smart buyers in other fields learn the marketplace and the inventory, watch what similar products have sold for, and then make their purchases accordingly. When it comes to real estate, you can emulate that by shopping around, tracking the properties you've rejected to note their sales price, and that should help you come to a closer approximation as to what "fair market value" actually is.

Hope that helps,
2 votes Thank Flag Link Tue Dec 6, 2011
Vr,
Welcome to Washington. Each agent has their own criteria for doing a Comparative Market Analysis. We look at sold homes, select those which we think are the best comparables in terms of age, size, quality and location. We may consult title companies for secondary opinions and on occasion consult with appraisers we know for more comparables.
Sites like Zillow and Eppraisal can give you a very broad range, but they are anything but precise. Your agent may look at them or ask another agents or her broker for a second opinion.
Ultimately anything is only worth what a buyer and seller agree to do business for. Your contract should contain an appraisal contingency (included in the financing contingency if you are financing) as a back up, just in case your final terms are over what the appraiser finds.
If the property is very unusual, we use comparables but adjust for variations and conditions. Finally, make an offer and see what type of response you get. Our market is very active for December. Don't be afraid to go after a good house if you really like it. I had a buyer come under contract today and two other offers appeared while we were negotiating.
2 votes Thank Flag Link Tue Dec 6, 2011
The true worth of any property is what you think it's worth.
Web Reference: http://www.321property.com
1 vote Thank Flag Link Wed Dec 7, 2011
VR,

The best answer to your question starts with you answering your end goal. For me and the millions I have invested in real estate over the years, there are two fundamentals to property. 1st the money is made in the buy and 2nd does it cash flow. This requires a shift your thinking. Instead of, is this the right price? You ask does this property make financial sense? Its a longer term investment mind set.

I understand you want a home for your family and the price you pay is important. Its just not the full picture. If you were to ask yourself how people of your family and friends live in the same home they bought 15-25 years ago, I would bet the number is less than 10%. Life brings change (hence every home for sell) because of this change you need to be sure that if you lose a job or you need to move that the home can pay for itself so you are not burdened by it financially. Does this make sense?

You may want a home and want to value it correctly but you need to define what the rental market is for your home and if your mortgage payment can be covered by rental income. Valuing the home sounds difficult in your situation (i agree with my fellow professionals below) but if you can get to a number you feel decent about and the home will cash flow if change comes your way. I would move forward with confidence.
Web Reference: http://www.vreg.co
0 votes Thank Flag Link Tue May 8, 2012
Hi Vr,

As you can see, true valuation before the closing is a tough target to hit. The most accurate and legally acceptable valuation method is the appraisal, however, two appraisers can still arrive at different figures even with appraisals done at the same time...appraisal valuations are as much an art as a science.
Review all these great answers, pull from all your resources, and should you have an extra 300 dollars, it is not out of line to hire your own appraiser to get to your solid answer.

Best wishes, Jim
0 votes Thank Flag Link Mon May 7, 2012
Vr,
Are you buying a home to live in or investment property? I realize both may be considered investments, but your primary residence should be a long term purchase versus a shorter term flip or rental property.
If you are looking for a longer term residence, there are many considerations to determine value beyond the financial aspects. Money is always important, but a home purchased strictly based on being a "bargain" may not turn out as expected.
A home is where we live and invest our time, energy, pride and memories. I've had a client also buying in Bellevue by pass several good homes to get the one that they really wanted. Its process of knowing what you really want, knowing what is available and finding the most appropriate combination.
Starting with a great agent, a great inspector and having contractors on speed dial can make the process easier.
Best of luck in your home search.
0 votes Thank Flag Link Mon Dec 12, 2011
Fixers are tough, VR. The fact of the matter is that it's not easy to identify properties where you can add value by fixing them up.

All the best,
0 votes Thank Flag Link Mon Dec 12, 2011
Thank you all who answered. We just let go a home after giving an offer (and getting a counter offer). Main reason for us NOT to raise our offer was that eventually felt that our original offer was itself was not worth the expenses we would incur to make it livable + sellable in another 5 or 10 years. So yeah, I experienced first hand what most of you said about the house's worth. Anyway - I am feeling a little disappointed with my agent. This person is not pushing us to buy a home and that's really great. When we first started, I made it very clear that - as a buyer, I will look at all the positive and exciting aspects of a home as soon as I see it. Where I need your help is in telling me what are the potential pitfalls in buying this property. That's not happening. We have to be vigilant about things that are superficially wrong with a house. Of course, home inspection will bring out several problems. But I expect our agent to proactively give us information that we discovered on our own before reaching the inspection phase.

I feel that we first do a search of an agent that suites our needs and then search for a home.
0 votes Thank Flag Link Mon Dec 12, 2011
Another thing which can help is to look at the Tax Assessment. Taken by itself, it means little, but there is a factor you can get from the County/City Real Property Tax folks (or whatever name is used in your area) that, when applied, will give you what they think Fair Market Value is. This is useful - to a point. It can also mislead you, but it is always something that I pay attention to. I work in about 50 different townships and there are huge differences between them. In some of them this figure is very useful, in others it can be way low, and occasionally I find it high. But it's free, easily available information and is worth looking at if you do allow yourself to be misled.

Others have told you best, and I want to echo them (I added the above because no one else did): the true value of ANY property is what a willing buyer and a willing seller agree to. Period.

The bank may have other ideas and they can call the shots when the buyer is fully extended. But if you are buying for cash or have more than the minimum down, what they think does not mean so much, not that you should ignore it.
0 votes Thank Flag Link Sun Dec 11, 2011
A local Real Estate Agent/Broker would be your best bet. We have access to current and historical data that may not be readily accessible to others. In addition, Agents and brokers have a network of other real estate professionals including appraisers, loan officers and others in the industry that can be drawn on to help answer questions such as value and sales data.

As you may already be aware, most Real Estate brokers wold be pleased to meet you and discuss your situation and the property in question. I hope this answer has been helpful to you!
0 votes Thank Flag Link Sun Dec 11, 2011
Here is a great free link. You can put in any adress or zip code and see Active, Pending and SOLD homes. It even shows what the origional asking price was compared to the final sales price!
0 votes Thank Flag Link Thu Dec 8, 2011
well, while there might be people willing to pay "more than the appraised price"... banks won't be willing to give them loans without the house appraising out.......or.........unless they are offering large down payments, or willing to pay cash to make up the deficit between the sale price and the appraisal.

most contracts in my area offer "out" clauses in case the home doesn't appraise out.......then the buyer has the right to walk away...it's the "safety net" I mentioned in my first post.
0 votes Thank Flag Link Wed Dec 7, 2011
The true worth to you is what you are willing to pay and what your lender is willing to lend on. I suggest you make an offer with your agent's guidance, and your lender will be doing an appraisal which will clarify for you what THEY think it's worth. If you really love a house and think it's unique, there are many people who will pay more than the appraised price to have the home of their dreams.
0 votes Thank Flag Link Tue Dec 6, 2011
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