How Are Home Values Calculated?

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One question that comes up most often is around how home values calculated.

We’ve all seen various home value calculators online, and while it seems appealing to have an instant valuation for your home, these calculators typically aren’t very accurate. They are automated systems of algorithms, often based on tax records that don’t allow for variance from the average. They don’t take into account upgrades, views, lot locations, market conditions, and more.

If you’re seriously considering selling your home, you need an accurate valuation. The last thing you want to do is assume your home is worth far more than it is, and set unrealistic expectations for an asking price.

The good news is, you can turn to a trusted Nest real estate agent or Broker to accurately determine your home’s value, for free. So, how do we go about doing it?

Nest agent Benjamin Passwaters of Raleigh-Durham, North Carolina, has the following advice:

My process varies with every home, but I start with comparables, often called “comps.” Comparable homes are a collection of homes which dictate the subject home’s value.  I never deviate smaller or bigger than 500 square feet for a 3,000-plus square foot home, or 300 square feet for a home closer to 2,250 square. feet. The homes need to be located within a mile of the subject home, with a focus on the specific neighborhood. We also look for homes of similar builds; ranches compared to only ranches, two-story homes to other two-story homes, etc. The age of the home is another consideration, as well as the builder. We look at the last 12 months of sales numbers to establish a trend, focusing specifically on the last three months.

Home Values

With that base information established, the next consideration is upgrades. Does the home have new HVAC, roof, kitchen, master bath? I can meet in person or speak with my clients over the phone to fully understand the extent of these upgrades. Some of these updates may raise the value of the home, and some are better for the aesthetics of the home, increasing the appeal to buyers. For example, an outdoor kitchen may yield the smallest return of all upgrades dollar-for-dollar, but can separate one home from another and be the reason it sells. I cannot add $30,000 to the sales price because of it though. As a trusted agent, it’s my job to explain what upgrades add REAL value and which ones add perceived value, like an outdoor kitchen, steam shower, or custom landscaping. It makes a home seem more expensive, but when appraised it won’t actually add to the dollar value of the home.

Home Values

The next piece of the puzzle is the lot itself. An agent’s expertise really comes into play here. Is the home in a sought-after neighborhood? Is the lot flat, wooded, adjacent to a park, or to a golf course? Is the home on a quiet cul de sac, or a busy intersection? Does the home have a view of the water? Can you see a beautiful city skyline in the distance, or is there a power line obscuring the view? These variances can increase or decrease values by tens of thousands. It takes a local expert to understand the selling points and pain points when determining the value.

Home Values

With all of those factors determined, I set the asking price. I price to sell, not sit for six months.

A stale listing rapidly becomes less and less appealing to buyers. When you are ready to sell, we want the process to be as swift and painless as possible.

Because of the complex nature of valuations, and for all the reasons listed above, online calculators cannot provide an accurate value. It’s better to work with a Broker to accurately assess your home value. It’s free and doesn’t have to take long. When you are ready to start the process, I’d love to chat.

Home Values

 

Author Benjamin Passwaters is a Broker with Nest Realty Amberly. His goal is to educate each client on the buying and selling process, allowing them to enjoy the experience. Call or email me at any time: 919-608-4226 or [email protected].

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