If you're thinking of selling your house, you might be wondering how much it's worth. How do real estate professionals determine the value of a house? What factors do they consider? Here are some of the main methods and criteria that real estate professionals use to value a house.
1. Comparative Market Analysis (CMA). This is the most common method of valuing a house. It involves looking at similar properties that have sold recently in the same area and comparing their features, such as size, condition, location, amenities, etc. The real estate professional will adjust the value of the house based on the differences between the properties. For example, if the house has a larger lot, a newer kitchen, or a better view than the comparable properties, it will have a higher value. Conversely, if the house has less desirable features, such as outdated fixtures, structural issues, or a noisy street, it will have a lower value.
2. Appraisal. This is a more formal and detailed method of valuing a house. It involves hiring a licensed appraiser who will inspect the house and prepare a report that includes the estimated market value of the house based on various factors, such as market conditions, supply and demand, quality of construction, functional design, etc. The appraiser will also use the CMA method to compare the house with similar properties that have sold recently. The appraisal report is usually required by lenders when applying for a mortgage or refinancing.
3. Online Valuation Tools. These are websites or apps that provide an estimate of the value of a house based on public data, such as tax records, sales history, square footage, etc. They use algorithms and statistical models to calculate the value of a house based on the available data. However, these tools are not very accurate and reliable, as they do not take into account the unique features and condition of the house, nor the current market trends and demand. They should only be used as a reference point and not as a substitute for a professional valuation.