Appraised Value The Ups Downs Of How Much A House Is Worth

Dated: 11/30/2017

Views: 132

Image title

Determining Fair Market Value is an eternal struggle and major balancing act. That’s because buyers want a house to appraise on the low side—to keep the purchase price down. While sellers want the same house to appraise on the high side—to make the sale price higher. And then you’ve got the owners of the house—who also want the appraisal to be on the low side, in order to keep the property taxes down.

So with all these different agendas and points of view, how is the fair market value of a real estate property actually determined?

Once a year, your county sends all area homeowners official notices that put a dollar value on their property. And property taxes are based on those dollar values. But before those notices get sent out, a long, detailed process usually takes place. First, the land is valued as if it’s vacant—an empty lot, in other words. Then any improvements are described and measured. Improvements consist of the house and any other structures, pools, sheds, garages, and so forth. Next, most counties check the Marshall Valuation Service Cost Guide. It’s a standardized nationwide guide for determining the value of the cost per square foot to build a building that fits the description of the improved property. Next, if the house isn’t brand new, the replacement cost is considered, as well as depreciation; the year the house was constructed and the condition of the property are factors here. Appraisers then must take the critical step of comparing the value of the house with recent selling prices of similar homes in the neighborhood. At this point, the appraisal might stand “as is”—or it might be adjusted upward or downward.

Market Value is a theory, in other words—not an unchanging fact.

In a perfect world, you have to have willing buyer and a willing seller. Neither is under duress. Both are in a position to maximize gain and are trying to do this. But in the real world, things are rarely that simple and equally balanced. Which is why people feel differently about the appraisal value of a house. It really depends how strong their position is as a buyer or seller.

Does the local economy come into it at all? You bet it does.

Ask a successful Realtor about that! He or she will tell you they’ve noticed that Austin's fast-growing economy is attracting people from other areas who consider real estate here a bargain. That helps fuel increases in property values.

So—now you know where that Grand Total comes from.

You’re armed with the information you need to make a better house-buying decision. For instance, you can understand how two virtually identical houses that are in two different neighborhoods could be very far apart in price and appraised value. And why your choice of the right house in the right neighborhood could be worth a not-so-small fortune to you right now—and years down the road.

Blog author image

George Lopez

As a ARMY Veteran, Captain Lopez job was to complete the mission to the best of his ability while ensuring all his soldiers came home safe. Those same principles apply when dealing with his customers ....

Want to Advertise on this Site?

Latest Blog Posts

Wildflower Season The Best Places For Iconic Bluebonnet Photos In And Around Austin

If you’re new to Austin, you may be wondering what these spurts of blue are that you keep seeing along the sides of highways.  Well, these are bluebonnets,

Read More

Should You List Your Austin Area Home For Sale Now

Many people will tell you that the best time to sell your Austin area home is in the spring.  However, is now really the best time to think about listing your

Read More

Choosing To Rent Apartments Or Purchase A Home Is Based More On Preference Than Being Right Or Wrong

The age-old question continues as frequently today as it ever has before: Which is better: renting an apartment or buying a home?In short, we say: it depends on you.Choosing to live in apartments or

Read More

What Does A Listing Agent Really Do

Recently, I was talking to a prospective client.  We were discussing commissions and he commented, “well, a listing agent really doesn’t do anything”.

Read More