Do you know how much your home is really worth?

How Much Is Your Home Really Worth?

If you’re thinking of selling your home, you may be fantasizing about the profit you’ll reap from the sale or calculating exactly how much you’ll need to pay off your current mortgage and have enough left over for a down payment on the next house.

 

Before your fantasies run amok you need to realize that, while you can estimate the value of your home in a variety of ways, the true value is only what a buyer will pay for it. That said, there are several ways to get a strong idea of how much a buyer will pay for the property in current market conditions.

 

 

What Your Home Isn’t Worth

Many homeowners find it confusing that there are various numbers floating around that indicate their home value. Here are a few:

• Property tax assessment. Each jurisdiction uses a formula to establish home values for a tax assessment, but this price rarely correlates with the market value of your home. Your tax assessment can be higher or lower than the current market value.

• Homeowners insurance value. Insurance estimates are based on the cost of replacing your home without the land, so this value is skewed compared to market value.

• Mortgage balance. Your mortgage balance simply reflects your home loan. The difference between your loan payoff and the market value of your home is your equity.

• Neighbor’s home value. Even if your neighbor’s home is similar to yours, it’s not likely to be identical. A REALTOR® can help you evaluate your home’s worth in the context of other nearby properties.

• Cost when you purchased the home. Regardless of how long ago you purchased your property, the value can have gone up or down.

• Desired value. You can always try to put your home on the market for your desired price, but if you’ve over- or under-priced it, you’re shortchanging yourself. because you’re either selling too low or your house could sit on the market and eventually sell for less than if you priced it correctly in the beginning.

Comparative Market Analysis

 

A REALTOR® can do a comparative market analysis with recent market data to help you estimate your home value. When you sell your home, an appraisal will be required by the buyers’ lender, so keep in mind that your home has to appraise for the selling price or, depending on how your contract is written, you’ll have to renegotiate the sale or the buyers will need to come up with extra cash.

A CMA is both an art and a science. While it’s based on data, it also requires local market knowledge and intuition about which homes to compare and how to interpret the prices. Most realtors will look for recent sales of homes that are similar to yours, preferably within the past two or three months, up to about six months. In addition, a realtor can look at other homes currently on the market and homes that didn’t sell that were taken off the market to compare values.

 

The comparison of your home with others should include not only the size and the number of bedrooms and baths, but also the condition of your home, the neighborhood and the proximity to amenities. If you do not understand the comparisons a realtor is making, ask to see some of the homes currently on the market or look online at photos of the properties.

 

While it may be tempting to list your home with the realtor who tells you it can sell at the highest price, a smarter way to sell your home is to price it as accurately as possible from the beginning. Studies show that an overpriced home that lingers on the market will end up selling for less than the estimated correct price.

 

 

List with RE/MAX REALTY CENTER

Don't move it!

Keep Your Money Where It Is

It’s not wise to make any huge purchases or move your money around three to six months before buying a new home. You don’t want to take any big chances with your credit profile.

Lenders need to see that you’re reliable and they want a complete paper trail so that they can get you the best loan possible. If you open new credit cards, amass too much debt or buy a lot of big-ticket items, you’re going to have a hard time getting a loan.

I was already PRE- Qualified

Get Pre-Approved for Your Home Loan

There’s a big difference between a buyer being pre-qualified and a buyer who has a pre-approved mortgage. Anybody can get pre-qualified for a loan. Getting pre-approved means a lender has looked at all of your financial information and they’ve let you know how much you can afford and how much they will lend you. Being pre-approved will save you a lot of time and energy so you are not running around looking at houses you can't afford. It also gives you the opportunity to shop around for the best deal and the best interest rates. 

Do your research: Learn about junk fees, processing fees or points and make sure there aren’t any hidden costs in the loan.

How Much Does My Agent Need to Know About My Finances?

How Much Does My Agent Need to Know About My Finances?

Money is a delicate issue. How much we earn and how much we owe is information many of us prefer to keep close to the vest.

If you’re concerned about detailing your finances to your real estate agent, rest assured that there’s plenty of privacy in the client/agent relationship.

In their wheelhouse, Real estate agents don't need, or expect, you to disclose everything about your money. That said, they must understand your overall situation to help guide you to a home that’s within your budget.

An agent’s job is to negotiate a home purchase or sale on your behalf, keep the transaction on track and help you navigate real estate paperwork. His or her strength lies in understanding home values, and property and neighborhood features. Home financing is an altogether separate story from a home search or sale; therefore, agents usually don't delve into your finances to crunch the numbers.

Leave it to the lender

Agents are happy to let your mortgage lender handle the financial questioning. A loan officer at a bank or mortgage company calculates your maximum purchasing power and your monthly payments based on your loan application, financial documentation and debt-to-income ratio.

Be prepared to supply your lender with your last two years of tax returns, recent pay stubs, bank statements and investment accounts. Agents then present a lender-generated preapproval letter to listing agents, indicating the amount you’re able to borrow.

Contact your local RE/MAX agent if you have questions about buying a house or selling one. These real estate professionals can guide you – with discretion – toward your next home.

Is it time for your annual exam yet?

Give Your House a Physical

 
Would you buy a car without checking under the hood? Of course you wouldn’t. Hire a home inspector. It’ll cost about $200 but could end up saving you thousands. A home inspector’s sole responsibility is to provide you with information so that you can make a decision as to whether or not to buy. It’s really the only way to get an unbiased third-party opinion. If the inspector does find any issues with the home, you can use it as a bargaining tool for lowering the price of the home. 

It’s better to spend the money up front on an inspector than to find out later you have to spend a fortune.

 Lisa Bear of RE/MAX (262-893-5555) 
an experienced real estate agent in Wisconsin, Waukesha County & the entire Milwaukee Metro. Wisconsin Lake Living.

The cost of sleeping

Avoid Sleeper Costs

The difference between renting and home ownership is the sleeper costs. Most people just focus on their mortgage payment, but they also need to be aware of the other expenses such as property taxes, utilities and homeowner-association dues. 

Renting and home ownership also need to be prepared to pay for repairs, maintenance and potential property-tax increases. Make sure you budget for sleeper costs so you’ll be covered and won’t risk losing your house.

 

Maybe it isn't the right time or is it?

Don’t Try to Time the Market

Don’t obsess with trying to time the market and figure out when is the best time to buy. Trying to anticipate the housing market is impossible. The best time to buy is when you find your perfect house and you can afford it. Real estate is cyclical, it goes up and it goes down and it goes back up again. So, if you try to wait for the perfect time, you’re probably going to miss out.