Real Estate Prices - Finding Comparable Sales
Real estate is that rare commodity that is truly unique. No two properties are the same. Even seemingly identical tract houses on same-size suburban lots are different, because they are located on different spots on the earth.
No wonder real estate prices are so hard to predict accurately! Still, the best system we have for calculating the value of real estate is to assess comparable sales - homes that have sold that appear to be similar to the subject property.
Real Estate Prices - Geographic Comparables
When assessing comparables, a homeowner or appraiser should stay close to the neighborhood where the subject property is located. That old real estate saying is true: location, location, location.
The further away the appraiser ventures from the property that is being valued, the less likely the comparable sale is to have any relevance. For instance, a home on a hill with a view will almost always be more valuable than a home on a flat street with no view. It makes no sense to compare the real estate prices of two such homes, no matter who similar they are.
Real Estate Prices - Size Comparables
Within a defined geographic range, appraisers should compare real estate prices of similar properties; i.e., properties that are approximately the same square footage as each other and which have the same number of bedrooms and bathrooms. In general, appraisers should try to compare apples to apples in terms of size of the house, number of cars that the garage will hold, number of bedrooms, number of bathrooms, number of stories, and so forth.
Real Estate Prices - Finish Comparables
The interior finishes used on a home make all the difference in the world in real estate prices. Expensive custom cabinetry will always make a home more valuable than cheap stock cabinets. Natural countertop finishes like marble, granite, and concrete will lead to higher real estate prices than laminate or tile countertops. Similarly, flooring of natural substances like wood and stone will usually generate higher real estate prices than vinyl, linoleum, or laminate flooring.
Real Estate Prices - Getting Estimates
If you are merely curious about the value of your house, and you don't really need to know how much your house is worth, ask a real estate agent for a market valuation of your house. This is the least reliable price report, but it will give you a general idea of the value of your home.
If you need an official appraisal for a loan, for an estate, or for a divorce, use a certified real estate appraiser to advise you of real estate prices that affect the value of your home. The appraiser will establish a range of value for your property.
