There are only a few reasons why a person would want to determine the true value of a home. The main ones are: to sell the home, to refinance the home or to settle an estate. The ways to do this are many and while there are pros and cons to each method, only one has stood the test of time and, more importantly, the test of law.
One of the more popular methods to determine the value of a home is to contact a realtor and ask for a market analysis. This can often be obtained by contacting several realtors and state an interest in selling and that the agent will be determined by market analysis and interview. While this is not an honest approach to obtain services, it will provide an estimate of the value of the home. The problem with relying on a market analysis is that it incorporates the asking price of other homes in the area and does not reflect actual sales that have closed.
Another method is to spend the time to research tax assessments and past sales in the area and from that draw a conclusion as to the value of the home. For areas that maintain this data in an online searchable format this might be easy but not all areas do this. Many require that the researcher visit the registry or office of deeds or city hall and search the record books in person and some even charge a fee to obtain information if it requires assistance from public employees. This can be a long and involved process and unfortunately it will not withstand legal scrutiny.
A Real Estate Appraisal is Best
The one method that is accepted in legal proceedings and by financial institutions is a real estate appraisal by a professional and licensed real estate appraiser. The advantage of the real estate appraisal is that it is based on actual sales by willing sellers and willing buyers and reflects the value of these homes that was agreed by both parties. While a real estate appraisal will cost between $400 and $500 depending on location, the cost is well worth it because now the home can be placed on the market for the value it represents and if the buyer needs 100 percent financing (still available to veterans who have a VA home loan certificate of eligibility) then there is no question about value to the lending institution.
Additionally, the appraiser will also list the value or adjustment to the base value for various items that are characteristic to that home. For those items that are listed as adding negative value (that bring the home value down) it may be possible to correct those with minimal cost if the homeowner is a good do-it-yourselfer. Larger items, while costing more than the amount of value they will add, may allow the seller to obtain a sale faster which can also be beneficial. For those who are selling the home, it may also be advantageous to obtain a home inspection in order to correct those things in advance of a sale in order to get the quick sale.
A home’s true value needs to be obtained in a manner that leaves little doubt as to the actual value of the home. Some methods leave doubt but a home appraisal does not and that is the preferred means to determine a home’s true value.