Today I’m eager to discuss property values. As a real estate agent, one thing everyone looks to me for is the value of the property whether you’re buying or selling. Most people start online, and that’s a good place to begin—but don’t get too wrapped up in the values that you see online because those values can be very skewed, it’s all done by logarithms. No one has been in the home, they aren’t correcting for the condition of the property, and so on.
The three terms you need to know if you’re entering the real estate market are ‘opinion of value,’ ‘assessment,’ and ‘appraisal.’ These terms are all different, and I don’t want you to be confused by them.
Opinion of value: If you’re selling a house, most people have a real estate agent come over, walk through the house, and provide you with an opinion of value — the amount the agent believes a buyer will pay for your property in today’s market.
Assessment: An assessment is the city’s value of your property that they use to determine your taxes. The value the city has is distinct from the market value. There’s generally not much of a correlation. The assessed value is often less than the market value, but not always. It’s not something to get too concerned with, other than for your taxes.
Appraisal: The most important thing you’ll need to know about is the appraisal. It commonly takes place two weeks after you have an accepted offer. A bank will send a certified licensed appraiser out to give an independent value of the property. They’ll walk through and they’ll come up with an appraised value of the property. Usually, the appraised value of the property comes back as precisely what the property value is in the purchase and sale agreement.
If the appraised value comes back as less than the property value, you have a bit of a complication if you’re the seller. That means the buyer will likely come back and negotiate the price with you. A real estate transaction is always a naturally contentious affair and this can be one of those times. If you’re a buyer, you can have another appraisal done. You normally can’t adjust it, but sometimes another appraisal will come back with a different price.
If you have any questions or other topics you would like to hear about, I’d love to help. Please call or email me, I would like to discuss these with you and get your feedback.