Calculating Home Value
No home’s value is absolute. The only true measure of a home’s value is an agreed price that a buyer will pay and a seller will accept. All other methods are an educated guess and some guesses are better than others.
Platforms such as RPR, Street Scout, Zillow Zestimate, House Canary, Redefy, Open Door , Redfin, and Trulia use public record data and include assessor information and recorded sales in the area. Pricing based on average condition, because the actual condition and any remodeling of the home is not known.
Prepared by a certified appraiser and usually ordered by a mortgage lender at the time of sale or re-finance. Appraisers measure the home and select at least three similar homes in the area and adjust up or down, based on subject home and comparison home. Adjustments done according to a strict set of rules or guidelines. The purpose of an appraisal on almost all homes is to confirm value when a loan is being made. They keep mortgage lenders accountable.
Used by real estate agents to determine what your house would or should sell for in a given market. Agents use a comparative market analysis (CMA) drawn from the MLS database. A CMA looks at homes actively for sale, pending, in escrow and sold in the last 6-12 months. The most common criteria used is square footage, number of bedrooms, age of construction and distance or radius from subject home. Agents also visit the home to determine condition and improvements to impute their intuition and their expertise regarding the market based on years of experience.
Is a tool, not a rule. Square Footage provides a common denominator to compare different homes. It is important to a homeowner that they have an accurate measurement of square footage. The method of calculating square footage is to measure the outside of the house, establish a footprint, and then subtract non air conditioned spaces.
When there is a question to the accuracy of square footage, it is best to have measurement done by a certified appraiser. This can be ordered separate from actual appraisal.
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