In days long gone by, a homeowner had little option but to rely on word of mouth, or a simple guess, to determine the value of their house. Even real estate appraisers didn't have much reliable information to go on. In fact, I can still remember my shock and awe when a friend of mine, who has been appraising real estate since the early 70's, explained how he use to be taken up in a small airplane by bank executives who would then ask him what he felt "that house down there" was worth.
Sadly many homeowners today are still in the dark about the true value of their home even though there is a wealth of data available right at their finger tips. So what's keeping them in the dark? Well usually, it boils down to two main things; emotions, and a lack of knowledge about what data to look for and where to look. So let's shed some light on these two topics.
Emotions! - The first thing homeowners should do when they want to know the real value of their home is. . . . have an emotionectomy. That's right, you have to pull your emotions out of the whole process, and that means realizing that your home is really a house to someone else.
This can be one of the hardest things to do because we build our lives around a house to make it our home. It's where little Susie took her first steps, and little Johnny rode his first bike. It's where we mark doorways with the heights of our children as the years pass by, and it's where we celebrate holidays with family and friends. It's also where we don't seem to mind spending our free time, on nights and weekends, fixing things up, or tackling the next huge project we are sure will increase its value.
This is where the challenges begin. When we see our house as a home, we don't see it the same way as a prospective buyer. Likewise, we no longer see how Barney, the 75 lbs Rottweiler, put his own personal touch on the back door when he was ready to come in. Nor do we notice the stain on the ceiling from where little Johnny tried to see if Superman could break free from his bondage before the bathtub filled up. And without a doubt, we know for a fact, that the canoe shaped fireplace we spent the last eight weekends building obviously must have added $10,000 to our home's value. I mean who wouldn't want to get a refreshing spray of water from the bow when grilling on those hot summer days.
So to find the real value of your home, you have to pull the emotions. Once this task is complete, you 're ready to hit the ground (or should I say mouse) running and get some real numbers that will help you determine the value of your home. Luckily, the internet is full of numbers. The key is to know what numbers you can trust.
In order to help you determine the value of your home, you will want to look for data on how much homes have SOLD for preferably in your neighborhood. Far too many homeowners have inflated values running through their heads because Jim and Sally up the street have their house on the market for $????.
An asking or list price is not a sign of a home's real value. It can be the value, or it can be a complete whim. Jim may not really want to sell his house at this time, but if someone is crazy enough to pay that amount, he'll take it.
Therefore, you want to find data for sold properties only. Likewise, you don't want to use broad based estimations like Tax Assessments or Zestimate® from Zillow.com. While these will normally get you in the ballpark of the real value of your home, they can still be off by tens of thousands of dollars.
So where can you get this data? Well the best place to start is with your local multiple listing service. However, you have to have a real estate agents license to gain access. The next best thing is to ask an agent for a CMA which stands for a Comparative Market Analysis. The only challenge with this method is, most agents make money selling houses not giving away free information. Likewise, you may receive a best case scenario on a report like this. Therefore, go to the next best source, your county courthouse.
County courthouses record data on the sale of real estate in two main ways. They collect data for tax records (tax assessors), and they collect data for the actual transfer of ownership (register of deeds). You can usually find what you're looking for by googling your county name and tax records. Or for those of you in our market, you can simply click on the appropriate link; Wake County, Durham County, Chatham County.
Once there, you can enter your homes address and pull up a large amount of data about your home. Most sites include when you bought, from who, the amount you paid, the tax assessment value, how big your home is in square feet, etc. Now look for a tab that is usually listed as SALES. Once you click on this tab, most sites will pull up the recent sales of properties around yours and show you what they paid for the home. Please note that most courthouses have a delay in recording sales data. Likewise, if you know of a house that sold recently and it has not showed up on the county site, you will want to move on to the next place to search.
There are a number of good sites that show sold listings, for example Zillow.com and Trulia.com which are both free to the public. However, should you not find the data for that sale there, you could also ask a real estate agent for the sales data for that particular house.
Once you have the addresses of the sold homes, search the courthouse records for information on how big they are, when they were built etc. Then drive by them, see what kind of condition they are in. Introduce yourselves to the homeowners and explain how your trying to determine home values in the neighborhood. You don't have to put them on the spot and ask them how much they paid (you should already know that from your earlier online searches), but you can be friendly and ask them how they like their new home. Show interest in it and them and they will be gushing with pride about what they bought and will most likely give you a tour. Then you will know firsthand how many bedrooms and baths it has, as well as what kind of condition it is in.
Once you have performed all this research, you should have a much better feel for what your home is worth. And as long as you can remove your emotions and look at your house like a prospective buyer, you should be able to pinpoint a number for the real value.
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