Establishing Market Value For A Property
Our training course dives in depth into all appraisal aspects with abundant examples and explainations. PLUS more into the business end of this business. Also the Income Approach as it applies to commercial business property tax appeals is a full course that is available.
House Values as it relates to Home Appraisals
The first step in house tax reduction is to determine the value of your home. This process is often referred to as a home appraisal and is used for determining the market value of your home. The formal name given to this process is a market analysis or fair market value comparison. Our book simplifies this process for you providing valuable information as well as supplying ideas that you probably didn't think of yet.
An appraisal is an opinion of value, an estimate of worth. The Federal National Mortgage (FNMA) states, "Market value is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale,(whereby) the buyer and seller, each (are) acting prudently, knowledgeable and assuming the price is not affected by undue stimulus."
The value of residential real estate is estimated by comparing the subject with similar properties that have been sold recently. We start by looking at our neighborhood to find comparable sales or properties in similar neighborhoods that share similar characteristics of lifestyles, income level of residents, surroundings, average age and home values.
Compare apples to apples, oranges to oranges. Neighborhoods have boundaries and barriers to the best neighborhood which may signal an abrupt change in lifestyle i.e. railroad tracks, freeways, highways, major traffic arteries, lakes, rivers, mountains, etc. There are political boundaries created for government purposes, such as school districts, assessment districts, zoning districts and city limits. In your neighborhood analysis, you may consider recreational facilities common to your situation. The focus is to find comparable home value in similar neighborhoods for your home appraisal analysis.
In order to have valid home appraisal values, all you have to do is find 3 or more homes that sold recently having amenities and characteristics similar to yours. You'll only use the best three in your analysis.
The data is free. Ask for the sold listing for the timeframe you're seeking from a local real estate office. They'll print out that information. Or one can Google: "sold listings" "zillow sold listings" "mls sold listings" "real estate sold listings" "realtor sold listings" for online stats.
Below are some free resources that stand out:
Personally, I like to visit a real estate bricks and mortar real estate establishment to aqurie their MLS information. It's eye-witnessed, more thorough in highlighting the best-selling features for that sold property. Those featured items often serve as adjustments if they are better than the clients' property.
Adjusting Comparable Home Values
Because properties are seldom alike, it will be necessary to make adjustments between the comparable properties as compared to the subject property (your property). This process equalizes the properties in the comparison. A good definition according to a leading appraiser, Ventolo and Williams, states that an adjustment is a "decrease or increase in the sales price of a comparable property to account for a feature that the property has or does not have in comparison to the subject property."
In other words, the comparable properties are adjusted to reflect the value of the subject property. You never adjust the subject. If two houses were identical in every way except that the subject (your house) had a deck and the comparable did not, the value of the comparable would be adjusted upward.
Conversely, if an item in the comparable property is inferior to that in the subject property, a plus (+) adjustment is required to make that item equal to that in the subject property. In other words, if a comparable sale property has a major improvement that your property does not have, make a minus adjustment. On the other hand, if you enjoy a major improvement and the comparative sale property does not, make a positive adjustment. Round off adjustments to the nearest $100. Our book contains hundreds of easy to use home value examples for your house tax reduction.
Phases of a Home Appraisal
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