Monday, November 17, 2008
It is an openly acknowledged fact that many less knowledgeable investors pay more than the market value for the property they buy. This is precisely the chief reason why so many newcomers to real estate investment do not stay in the business to make profits. Most beginners in real estate investment do not acquaint themselves with prevailing market conditions and also do not have the type of capital to succeed in real estate business.
Ignorantly overpaying for their first investment property turns out to be a very costly mistake and thereafter the starters find it tough to recover and that leads to the end of their foray into real estate. That's why it is imperative that you learn how to accurately estimate the current market value of potential investment properties! It is undoubtedly the key aspect to the entire real estate investment business!
It is rather unfortunate is no Kelly Blue Book available for real estate investors to readily know used property values. You have no other option than to learn for yourself how to estimate the current market value of potential investment properties. But in the present age of computers and the Internet, it may not be difficult to arrive at a rough estimate of a property's current market value. This is especially true for real estate investors located in counties where all property ownership, sale and tax assessment records are available online.
First of all, let us understand what is meant by current market value. The Appraisal Foundation's Uniform Standards of Professional Appraisal Practice, defines market value as: "The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the sale price isn't affected by undue stimulus.” It is also equally important to understand the difference between assessed value and appraised value.
Tax Assessed Value: Tax-assessed value is the value determined by the local taxing authority for a piece of land. In most well-developed cities, owner-occupied single-family houses are generally assessed at around seventy percent of their fair market value.
Appraised Value: Appraised value is the value estimate given to a property by a licensed property appraiser using the standard appraisal methods. The appraisal method to accurately estimate the fair market value for an owner-occupied single-family house is based on the recent sale price of comparable properties within the same area.
There three most commonly accepted methods used by property appraisers to estimate property values are the: Comparison Sales Method, Income Method and Replacement Cost Method. The Comparison Sales Method is calculated on the basis on the recent sale prices of properties that are within the same area comparable in size, amenities and features. The Income Method is used to estimate the value of an income producing property based on the net income the property produces. The Replacement Cost Method is based on what it would cost to replace the improvements on property using similar construction materials and construction methods.
There is an accepted scientific method to estimate a property's current market value. First of all, log onto your county's property appraiser or assessor's Web site to obtain the tax assessed value of the property under consideration. Search to ferret out information about your county's property tax rolls for recent sales of three to five properties in your area that are comparable in size, amenities and features. Study carefully the income and expenses that are listed on the income and expense statement of the property under consideration. Analyze the property's income and expenses for the past twelve months to estimate its net operating income potential. Estimate the property's value by multiplying its net operating income by the capitalization rate you came up with for the property. Calculate the cost of replacing the improvements on the property using identical building materials and style of construction.
Labels: How to Accurately Estimate a Property's Current Market Value
posted by nisha
@ 1:08 AM
permanent link | Post a Comment |
0
comments
Friday, November 14, 2008
One of the main reasons properties become hard to sell is the avarice of home owners demanding an unreasonably high price not in conformity with prevailing market conditions. Some sellers knowingly price their homes/properties significantly higher than market value on the pretext that it will provide them extra elbow room for negotiating with prospective buyers. They fail to understand that overpricing will completely eliminate all likely buyers.
Demanding a fair price for your property is one of the keys to quickly and successfully complete the sale. If your objective is to sell your home quickly and save on real estate commissions, then fix a realistic price comparing your home with similar homes for sale in your area. If you are still unsure how to price your home, consult a local real estate appraiser or ask a real estate agent to provide a Comparative Market Analysis or CMA. Most agents will provide this service for free, if you agree to list with them.
List the repairs and improvements you need to compulsorily carry out to make your home fit for sale. If the house needs a new roof to keep the rain out, then by all means, that is a critical repair that needs to be done on priority basis before selling your home. But do not needlessly undertake avoidable repairs and modifications that may not enhance the sale value of your home. Most buyers cannot visualize changes and will not be forthcoming to buy your house if the first impression is not appealing. Those who can visualize changes and are prepared to undertake repairs on their own will expect you to substantially reduce the sale price of the house to compensate them for the improvement work.
You must, without a second thought, undertake all minor improvements like - pressure wash dirty siding and dingy decks, repaint and repair minor defects in exterior structure, clean the windows and gutters and keep sidewalks and driveways clear, clean the windows and gutters and keep sidewalks and driveways clear, make sere the house number is clearly visible from the street, replace or still preferably replace the mail box with a new one, arrange for a new and attractive welcome door mat, remove any vegetation if grown between concrete sections and bricks, Mow the lawn and get rid of weeds, rake and stray leaves etc.
Make it a point to keep pets out of the house and off the property during buyer inspections. If you think your house has any unpleasant odors, take steps to remove them immediately as prospective buyers will summarily reject houses that stink. An attractive, well-maintained home will generally sell faster and for a higher price than a similar home that looks drab or run-down. When you prepare your home for sale, take a critical look inside and out. Keep everything from the floors to the walls to the windows perfectly spotless. Clean light fixtures and all other electrical fittings and appliances such as the oven, refrigerators, microwaves etc.
Make your sanitary ware and bathroom fittings to glisten. When showing your home to potential buyers, switch on all the lights, even if it is midday. Buyers like homes that are bright and airy and so having the lights on helps. Lift all curtains and window shades and if weather permits, keep the windows open for fresh air. Internet advertising is becoming indispensable when selling your own home. Recent studies show, last year over 70% of home buyers searched on the internet before buying and it is estimated that that number will further increase in coming years. With large number of houses coming up regularly for sale, it is easy to see that competition is getting fiercer. So, the better prepared you are, the better and faster you can expect to sell your home.
Labels: Getting Your House Ready to Sell
posted by nisha
@ 10:33 AM
permanent link | Post a Comment |
0
comments