How Do Real Estate Agents Set Property Values?
Property values, depending on the economy and other outside factors, are often a moving target. In a healthy market when supply and demand are aligned, it can be relatively easy for real estate agents to determine a home’s value. When something is out of balance, such as when the market experiences low inventory and buyer interest is high, values become more of a challenge to nail down.
To put it simply, the market value of a property is the amount of money a home buyer will pay for it. This is the evaluation method real estate agents use when determining a list price for a home. The assessed value of a home is rarely the same as the market value and involves the use of a complex set of calculations to determine property taxes. The appraised value of a home is determined by a professional appraiser, typically hired by a lender, to ensure that the home is selling at or above market value before lending on it.
Since market value is set by past purchases, real estate agents use the sale prices of homes that sold over the past six months as a guide. They narrow the field to include homes only within a certain radius, typically within a mile. They compare the homes to one another, adding and subtracting value according to the age of the home, size, location and amenities. Some homes are more of a challenge to compare, such as luxury homes.
Once your real estate agent has performed the valuation research and determined a value, they may ask you as the homeowner for any information you have about the comparable homes used.. For example, the neighbors were going through a divorce and needed to sell quickly, so they accepted a low price for their home. Maybe another neighbor included all of the furniture in the sale, causing an inflation in the price. This type of information helps the real estate agent tweak the home’s value.
Your Agent’s Goal
A real estate agent’s goal in determining value is twofold. First, they need to ensure that the value is close to or the same as the appraiser will calculate. Then they need to ensure that the home isn’t overpriced, because overpriced homes typically don’t sell until the price is dropped, at which point the home has most likely become stigmatized. Typically, homeowners lose money when this happens.
Things to Note
Only a local real estate agent or appraiser has access to complete and reliable information, but you may find home prices on real estate websites. However, these non-broker affiliated sites don’t have access to the same information as the local and regional databases do, so what you find there is only a portion of the number of homes currently on the market and recently sold. You always want to ensure that you are working with a reputable real estate agent to ensure you are getting the best, most accurate information available.
The best way to understand your propertys’ value is to have the help of a professional real estate agent. Coldwell Banker Carroll Realty’s local realtors have the expertise and information at hand to get you the best bang for your buck! We have experienced real estate agents throughout Panama City, Panama City Beach, and 30a ready to meet with you! Start your search for the perfect property with us today.