at $275,000. In 2017, Redfin’s calculator valued this 1890 Victorian home (4 bedrooms, 1.5 baths, and 2100 sq. ft.) in a four-block area of “Grand Old Ladies” at $158,00. The apparent reason is that the six “comps” (comparable recent sales) include only 2 homes in this desirable neighborhood (over $300,000), while four others are outside this small neighborhood, although close, and sold for $150,000 to $199,000. Information that would be known to real estate professionals with expertise in the area is missing. These tools are worthwhile for obtaining “comps” of area sales; however, they are not highly accurate in arriving at a listing price.
PROFESSIONAL APPRAISAL
Nothing determines the sale price of a piece of real estate but the price at which it sells. Houses are not same-price identical tins of tuna on the grocery store shelf, nor shares of stock valued and traded every day on the stock exchange. Real estate appraisal (aka “property valuation”) is the process of developing an opinion of value for real property. This is the “market value,” i.e., what a willing and reasonable buyer would pay to purchase the property from a willing and reasonable seller. Real estate transactions almost always require appraisals because they occur infrequently on a given property and every property is in some way unique in its features and characteristics. An appraisal helps with various decision-points. The seller can use the appraisal as a basis for pricing; the buyer can use it on which to base an offer. Lenders use appraisals to know how much money to credit to their borrowers.
The principal factors in a house appraisal are:
• dwelling type (e.g., one-story, two-story, split-level, factory-built) • features (including design)—materials used, the kind of 38
Powered by FlippingBook