fair sale. Essentially, this is a pre-negotiation opinion of what a house is worth. Appraised value is an evaluation by a professional appraiser of a property’s worth at a given point in time. Appraised value is a crucial factor in loan underwriting and determines how much money may be borrowed and under what terms. For example, the Loan to Value (LTV) ratio is based on the appraised value of a home and not on the agreed upon purchase price. Do not make the mistake of conflating your home’s amenity value with its market value. All too often sellers believe their house is worth more than it truly is because they let their subjective emotions and feelings about their home cloud their judgement. Also, when assessing your home’s value, do not make the mistake of relying on an Automated Valuation Model (AVM). For example, Zillow’s “zestimates” routinely either over or under estimate home values by tens of thousands of dollars simply because a “zestimate” does not (and cannot) factor in a particular home’s unique features and/or actual condition.
THE HOUSE NEXT DOOR
It is amazing how often I hear sellers bragging about how their agent sold their house in just one or two days. The truth is, properly priced homes normally do not sell that fast. Nine times out of ten, the ones that do are usually significantly underpriced. To illustrate, assume that your next-door neighbor’s home is identical to yours. It is the same age, has the same floor plan, is the same color, etc. Now assume it closed escrow yesterday for $675,000. The question is: What is your house worth? Most people (including most agents) would say your home is obviously worth $675,000. However, that is true in only one of three
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