Real Estate Value: Knowing yours is Key to Mortgage Success

The value of the existent estate you own, whether it is your personal abode or an investing property, is critical to your mortgage and financial success. If the balance on your mortgage is close to or higher than the value of your property, your existent estate is not the financial machine it should be. Therefore, if you desire to be successful in existent estate ownership of any kind, you absolutely must cognize how to determine the value of your property.

Now, there may look to be a simple solution to this problem, you say. Get an appraisal. Sure, this would work, but assessments are not cheap. For residential property, they get around $175 and range to $400. For investing existent estate, they can be much higher. Imagine owning 25 houses and needing to cognize the value for each. You certainly wouldn’t want to pay for 25 appraisals. So, here is a simple expression for learning the value of your property.

1. Learn the average rate of grasp in the vicinity where the existent estate is located. Almost any property will increase in value two to three percent each year, even in down areas. So, if your rate of grasp is three percent and you paid $100,000 last twelvemonth for your house, it is now deserving at least $103,000, based solely on appreciation. You can learn this rate by calling a local realtor. Remember, in flush neighborhoods, grasp rates may range from four to eight percent.

2. Estimate the value of any improvements, using a ratio formula. That is, if you better the construction of the property (new roof, deck, automatic garage doors, windows, etc.), all for about 30 to 40 percent of what you paid for the improvement. Now, this is a variable, depending on location, so don’t take this as an absolute. So, last twelvemonth I set all new windows in my house. It cost $10,000. I presume I can add $3,000 to $4,000 in value to my house. Cut that ratio to 15 percent for cosmetic improvements like paint, carpeting and landscaping.

3. Know comparable sales within one mile and within the last year. For example, if a house 1 block away that is almost indistinguishable to yours in dimension and style sold last calendar month for $150,000, this is a great starting land for your value. Now, retrieve your home may have got got things the other house didn’t have, increasing your value even more.

4. Other home’s asking terms plays a small role. Realtors cognize their business. If you see a comparable home in the neighborhood, being sold by a realtor, check the listing price. Although not nearly as of import as the other parts of the formula, this certainly plays a function in determining the value of your property.

So, usage this formula, learn the value of your existent estate, and you will exert an astonishing amount of financial power.