If you own a home or other property, you may be curious to know what it is worth, although you may not want to pay for an appraisal. In today's real estate market, as a property owner, it is a good idea to know and understand the trends in real estate values.
Like stocks and bonds, money market accounts, IRA's, CD's, and other investment vehicles, your real estate, whether a home, rental property, or vacant land, is subject to day to day fluctuations in the economy and the housing market.
During periods of inflation or recession, or in a housing market where there is little or no movement, up or down in pricing, it is important to know all there is to know about property value, whether or not people are buying and selling, and how the housing market is reacting in your neighborhood.
Most people don't look at buying a home as an investment opportunity, although they should because a home is the most valuable asset that people will ever own in their lifetimes. When buying a home, it is usually thought of as a necessity, as a place to live and raise a family, but a home is truly much more than that.
If you look back just 20 years ago, few of us would have dreamed of seeing property values rise as dramatically as they have. So those who bought their homes then are sitting on an untold amount of wealth right now, providing they haven't refinanced and used their equity for other things.
With that being said, it may be time for you to get an estimate of what your property is worth. You don't have to pay an appraiser to get a good estimate of market value because most realtors will do a market analysis for you for free, using some of the same techniques an appraiser uses.
Many realtors offer free market analysis' in hopes that if you decide to sell in the future, you will use him or her for that service.
A market analysis is not an appraisal, and lenders will not use it as such if you decide to refinance or sale your property, but it is designed to give a relatively accurate estimation of value.
The market analysis takes into consideration what has recently sold in your neighborhood, how those properties compare in square footage and lot size with your property, and what amenities your property and your neighborhood has to offer.
To obtain this information, a realtor usually contacts a title company for a profile of your property. The realtor then uses his Multiple Listing Service (MLS) to determine what is currently listed for sale that has similarities to your property.
By looking at what has sold over the past 6 months and what is currently on the market, a realtor can estimate the value of the property in question. (Remember, this is not a true appraisal, but a fairly good estimate of value.)
By using a net sheet, a realtor can then estimate what you have in equity by subtracting what you owe on the property, if anything, from the estimated market value. A realtor should also calculate other costs which you may or may not incur if you decided to sell the property, such as commissions, escrow fees, loan fees, and termite reports, and other costs.