3 Ways to Calculate the Value of a Home
- Author Judson Voss
- Published April 15, 2010
- Word count 659
Whether you are a new real estate investor or a home owner looking to purchase a home and be confident in it's value, understanding how to calculate the the value of a home can be one of the most intimidating tasks. So much so it is one of the biggest hurdles keeping many people from making money in real estate today.
While calculating the value of a piece of real estate is not an exact science you can start to understand the value and reduce your fears of whether you are getting a good deal or not. With three steps it is possible to analyze the value of a home. Being able to quickly calculate the value of a home will allow you to analyze more deals more quickly and filter through the many foreclosures on the market today.
The goal here is to get an approximate value of a property and do it quickly...
Step 1 - Use online valuation services to find comparable sales near your target property. There are many free services online that aggregate recently sold home statistics. Two of the largest and most trusted are Zillow and Trulia. Each of these services also provide an estimate for what they feel the value of your target property is. The accuracy of these estimates have been a subject for much debate. What is important is the data they use to get these estimates. Doing some research will allow you to look at the raw data and find the homes that are comparable to yours and see what they sold for. I always recommend that you get at least three recent sales, 6 months or less, and homes within 1 mile of your target property. It is also important that you find truly comparable homes with similar beds and baths and of similar quality.
Step 2 - Network with other investors. When I got started investing in real estate I knew very little about the neighborhoods I wanted to invest in and it was a slow and arduous task to get the value of every single deal presented to me. I quickly found other investors in my area who seemed to know the value of properties as soon as they saw the address. After shadowing them for a while and watching what they did I quickly learned that they had a command of the neighborhoods they invested in and had analyzed so many deals in the past that they new the values from experience. Why not take the shortcut and ask them their opinions on property values. You still need to verify the information but it is a quick step to getting an approximate value.
Step 3 - Work with your realtor. If you are looking to invest in real estate and you don't already have one or two realtors you are networking with to bring you deals then you are really missing the boat. Lone wolves don't last in real estate investing very long. Have a couple of good realtors that know your target area and ask them their opinion on the value of the property. If after first glance it appears to be a potential deal go back to them and ask them to perform a CMA (Comparative Market Analysis.) They will do them for free and are usually pretty accurate.
These are three ways to calculate the value of a property. None are overly complicated and don't require a degree in appraising real estate to calculate. Just as importantly though these are not going to get you to the exact value of a home. The fact is there are many factors involved and the only real value is what a buyer is willing to pay on the day you want to sell your home.
If you want to finally conquer your fears and make money investing in real estate then make sure you attend our 6 week course online, Finding and Analyzing deals at http://www.thereiminute.com/ecourses/finding-and-analyzing-deals/
If you want to finally conquer your fears and make money investing in real estate then make sure you attend our 6 week course online, Finding and Analyzing deals at http://www.thereiminute.com/ecourses/finding-and-analyzing-deals/Article source: http://articlebiz.com
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