Determining a Home's Value
Posted by Bill True on
What Does It Mean?
As Buyer Agents, we also are constantly figuring out the value of property. The fact is, even with the best of intentions by the listing agent, the list price of a home is simply a gauge for what the seller hopes to receive for their home - not necessarily what it is truly worth, or what you should pay for your Sarasota real estate purchase.
Several values are readily available to end users on the internet, and although information is important, it can be misleading if it is not complete. With that in mind, here are some valuations you might see, and what they mean.
Often seen on tax records, this can be the single most confusing value to end users. The county determines the taxable value of a property yearly; these numbers are for taxation purposes and should not be considered market value, especially due to the fact that exemptions and discounts may apply to the current owner. The assessed value of the home is rarely what the home will actually sell for; they are an indicator, not an absolute.
The market value of the home is what it is worth based on recent sales of similar properties. This is a number generated real time and with up to date information. The market value is what a home is worth in the current market conditions and is the truest valuation as it reflects what people are actually paying for property right now.
This is the same as market value, it is a number generated based on analysis of recent sales which are similar in size, attribute and condition. If a home sold in extreme distress, for instance at 50% of current market value, this number can be considered but is not a true comparable unless other homes in the neighborhood are selling under similar conditions.
The appraised value is the value of the home according to an independent appraiser. While this should be a trustworthy number, there have been concerns as appraisals tend to be low in a tight lending market; and in a market when values are changing, appraisals can lose their integrity quickly.
There are several online valuation tools which are helpful, but should not be treated as gospel truth. The online estimate is an automated algorithm that works great in planned communities, but begins to unravel a bit when a property is located in an area of older homes, because it pulls comparables from a set radius. Downtown Sarasota, for instance, is very different on the east of 41 than it is on the west of the Trail. A home may only be a mile away, but it is a different type of community altogether.
The lesson is that there is no single value that is a hard and fast certainty. True Real Estate is skilled at looking at all the factors and determining a real time, accurate value for your home of interest as it stands today. We do guarantee you one thing- we will never let you over pay for a home!