How much is your real estate—your house, condominium unit, cottage, income property—worth in this market?

If a number immediately popped into your head when you read this question, I have a few more questions for you:

• How did you arrive at that value—detailed research, neighbourhood gossip, property tax market assessment or a comparative market evaluation from your local real estate professional?

• Why do you think real estate value for a specific property can be represented by one number and not a range of values based on the variety of value factors and prospective buyers for your property?

• How important is it for you to know the value of what is probably your principal asset and, therefore, to understand your full real estate purchasing power in this market?

• What are the consequences of being wrong about the value you're so sure of?

If you have no idea of your property's value or little confidence in what you know, why have you not taken advantage of free opportunities to determine the current market value of your real estate?

Real estate brokers and salespersons routinely offer their services free of charge to property owners. Received a "free market evaluation" certificate by mail or email lately?

Although there is no set definition of what a market evaluation should include, there are basic ingredients that can be useful in evaluating your position and the services offered by local real estate professionals:

• Solds: A property is worth exactly what a buyer is ready to pay for it. Analysing actual solds for your location and for properties similar to yours in surrounding neighbourhoods will provide solid ground for establishing value.

• Expireds: These are listings which terminated at the end of the usual thirty- to ninety-day period without a sale. Expireds are typically considered to be over-priced for the market, based on the condition of the property and current buyer patterns. These listings can also represent insight into marketing strategies to avoid or to adopt in your area.

• Currents: If your property were listed, how would it compare with the other houses or condominiums that buyers shopping that location or that price range would be shown? It's buyers' needs, wants and what's "in," not sellers' costs, that determine value.

• Value Boosters: Repairs, modernizations and improvements to your property can boost value. The real estate professional will offer some simple, cosmetic suggestions and others which may involve investment with a predictable return. Listening to these suggestions is the beginning of learning to separate pride of ownership from investment realities. What you love is not necessarily what buyers will pay top dollar for in your location. For instance, a swimming pool can devalue a property in some neighbourhoods. In others, this amenity is highly prized. Inground versus above-ground can also make a value difference.

• Value Range: Using solds, expireds and currents, you'll be led through the process of determining a range of value for your property. The real estate professional will explain why market value is a range rather than an absolute value. The relationship between that value and property-tax market value will also be discussed since local variations are significant. The value range will be evident to you after this buyer's-eye-view evaluation.

• Selling Costs: It's not the list price, or even market value, but what you would net, or keep in your pocket, that is really important. Typical costs will help you fully appreciate what value in an offer will mean to you.

  (Also see "The Offer: There's More to It Than Price.")

• What Ifs: Example listings for moves "up" or for "downsizing" will complete your real estate value picture. Sometimes sellers gain the greatest value in closing the price gap between their neighbourhood and those considered "better." Not all locations fare equally in a market. Values in your area may be boosted by buying activity while other locations, even the most preferred, may not be significantly affected or may even face a downturn. Rural property does not always increase in value as quickly as urban. If you want to move out of the city, check to see if you'll be favoured by a value gradient which allows you to buy more house for less money in your dream country setting.

As part of the evaluation, real estate professionals usually outline their services. Don't discount this as a sales pitch. It may be, but it is also an important opportunity for you to learn what you'd get for your money—the commission. If you've been out of the market for a while, this is a valuable education. Technology provides sellers and buyers with more access to listing information than ever before. Brokerage services and standards have also changed. Bring yourself up to date.

The opportunity: Contact a salesperson offering a free evaluation to find out what is involved (i.e., is it verbal or written?), and what each party should expect from the meeting. You want to know up front if there are any strings attached to the free evaluation offer. Make your wishes and concerns clear. The real estate industry has moved away from hard-sell, relentless high-pressure tactics, so if you feel you're being pushed into signing anything or committing to anything, end the meeting.

Real estate professionals welcome opportunities to "talk real estate" and to share their expertise or they would not offer the free evaluation service. Get a head start on the spring market by learning what your real estate represents in purchasing power.

Copyright � 2010 Realty Times. All Rights Reserved.
Source: Realty Times Last Updated: 03/29/2010 08:43 AM CDT

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