What’s My Home Worth?

That’s the million dollar question….. or the thirty-million-dollar question depending on your situation.  I am routinely asked the value of a home and at times, I am even bemused.  Over the years, all markets change: be it the stock prices, monetary markets, and, of course home prices. Since the financial meltdown a decade and a half ago, home values in particular have risen considerably in a majority of areas.  So with all these changes, pricing a home correctly can be difficult for many Realtors.

The strict definition in the lending and appraisal industry is as follows:

Market value is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

While there are many important facets in working with clients, correctly pricing the home is critical. While I often agree with the client on price, so all is well. Conversely, when a client has an inflated view of the homes true market value and thus overprices it, many problems can occur. “We can always lower it later” is the common refrain.  While that sounds good, I believe it be a poor marketing strategy

There are agents out there who will gladly take on that listing at the overstated price simply to get that listing, but I would prefer to be critically honest with the client about the pricing of the home and why that’s a sound marketing approach.  I would rather decline the opportunity for a prospective deal, knowing the home is priced incorrectly and will likely sit on the market for an extended period.  An extended period of time on the market is disheartening for the seller as visitors and interest wane during the listing period as the market recognizes the inflated pricing. This is even more important in a balanced market where neither buyer or seller has any advantage, a point of which we currently find ourselves.

My 20+ years of experience as a Certified Residential Appraiser allows me a unique prospective and understanding of certain nuances regarding real estate valuation. While there is no perfect formula, there are processes which make it easier to arrive at a price which will bring the most desired results, and in the quickest time possible.

o  The world pretty much knows the axiom; LOCATION, LOCATION, LOCATION, because it’s true!  Homes in Newport Beach and Corona del Mar will most certainly sell for much more than those properties more inland in Orange County.  Even within Newport and CdM, there are submarkets where pricing vary dramatically. I consistently counsel my clients to pay for the better locations.

o  Another critical factor, following its location, is the size and type of the property, and that includes lot size and the gross living area, or GLA. Most people use a calculation of Price per Square Foot(PPSF) as a measurement for value of real estate. This computation has many downfalls for the following reasons….

o  In any valuation of a Single Family Residence, which is where I am focusing this column, the land has an over weighted contribution to the value of the property, especially in Southern California and its coastal areas.  As time goes on and prices rise, the land is what appreciates, not the structure, which actually depreciates due to its limited useful life. Accordingly, using a calculation based on the price based on the square footage of the home, the structure itself, doesn’t take into consideration the most important factor in the valuation – the land – which may have favorable (i.e. views) or unfavorable (i.e. traffic) elements.  While this computation has a useful purpose, it needs to be used in context.  PPSF works more seamlessly for condominiums, as land value is not easily discernible.

o  From there I would look at comparable type properties within the market area. In some cases expanding that search when there are few like properties from which to evaluate, as the size of the home is truly a major consideration in the final price.

o  Finally, other factors involved in arriving at a price include upgrades and amenities. With tastes, design, and technology ever evolving, these elements can add enormous value to the price of the property.  On the flip side, outdated features can create a feeling that the home is priced too high, even if it is well maintained.

Thank you for taking the time to read my blog and I know what you may be thinking….. What’s my home worth??

Even if you’re not looking to sell your home at this time, keeping your  finger on the pulse of the current conditions will only help when the time comes in the future. My expertise allows me to help you by providing the fairest assessment of value for your home in the current market as well as down the road, when you are ready to sell. Let’s be social!

I hope this information provides some guidance and will be useful to you in when you are making knowledgeable real estate investment decisions.

If you have any questions or are interested in what your home is worth, please schedule an appointment with me by calling – 949.375.4487 – or emailing me at steven@gearynowakco.com

Find me on Instagram > @SteveDoesRealEstate