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What's my house worth?

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By : Jeff Stewart    99 or more times read
Ah, it's the big question home owners want to know. There's even a show dedicated to this question on the ever popular HGTV. What's my house worth? It's a fair question, and an important thing to know. Most home owners don't really know or care where the information comes from, or how it is computed, they just want the bottom line...Let's talk dollars!

I can tell you that I've faced this situation more than a few times... After sitting down with a potential seller, the conversation comes back to listing price, or what they will be asking a buyer to pay for their home. Without having talked to a Realtor first, most home owners can only rely on what they can find out through the fence to fence chats with their neighbors. "So if my neighbor down the street sold his home for $150,000, that's at least what I can get for mine right? Because I've been down there, and my house is way better." Maybe, or maybe not.

The old saying is that value is measured in what a willing buyer is willing to pay for a certain thing. This is true on most everything in our society, including our houses. Or it used to be anyway. The downturn in our economy has brought about some changes in all aspects of our lives. This includes the real estate market. The banks and companies that let buyers borrow money for the purchase of a home, play a bigger part than ever about what our homes are worth.

Before a lender will approve a contract giving the buyer the amount needed to purchase a home, they want to be sure their investment will be worth it. For example, they won't let a buyer spend $180,000 on a home that is really worth $160,000. "But I thought a willing buyer determined the worth of something by the amount they were willing to pay?" That's true if you've got the cash. If you want to spend $180,000 for something that is really worth $160,000, and you've got the cash to write that check; knock yourself out. If you have to borrow that money from a lender though, then you are at their mercy.

Lenders have appraisals done on a home for any potential purchase contract. This is where an independent third party appraiser does research on the home in question. They do this research by looking at other homes in the same neighborhood, sub-division, and area that have sold within the past 12 months. They compare things like floor plan, square footage, updates, age, roof, bedrooms, bathrooms, etc. All these things are compared and computed, and that's where your home's value is determined. Just because you have found a willing buyer to meet your asking price, it does not always mean the deal with go through.

Unfortunately, just because we think our home is nicer than the one that sold down the street; that's not always an indication that it's actually worth more. If you are thinking of selling your home, it's important to have a market analysis done by a licensed Realtor, so that you will know what your home will eventually appraise for. In today's market, lenders are more careful than ever to make sure they are not giving too much money on a property that is actually worth less. As a seller, it's important to get as much as possible for your home, but if you spend time, energy, and money trying to get to that close date; it's most important that you get there. If you have a good idea of your home's actual value, and the help of a licensed professional, the chances are that you will.
Written by Jeff Stewart, Stewart Real Estate Services, sponsored by Region Realty.

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