Estimating Property Values

ESTIMATING VALUE IS A COMBINATION OF ART AND SCIENCE
Homekeys was the first company in the US that offered FREE online estimations of property values to the residents of the State of Florida. Our Realtors believe their clients should have transparent access to all elements needed to make rational buying and selling decisions, and what can be more important that “property values”.
Estimating property values is easier said than done. Without exception, we all believe what we have is worth more than what it is actually worth to others. And this “gap in perception of value” becomes bigger during tough economic times as we are going thru now.
The challenge is to establish an objective, unemotional baseline for buyers and sellers so distressed sales and emotional purchases become the exception, not the rule.
It is no secret that sellers want to sell high and buyers want to buy low. But they often arrive at the negotiating table with very different ideas on price. A fair and objective property valuation can help buyers and sellers find common ground and streamline the negotiation process.
In the end, the property is worth what a buyer is willing to pay. But to help both buyers and sellers achieve their goals, both should have a fair and objective estimate of property value.
Unfortunately, even objective estimates are still estimates, and there is no way to assure 100% accuracy:
· Appraisals performed by a certified appraiser are not 100 percent accurate.
· CMA’s (Comparable Market Analysis) and BPOs (Broker Price Opinions) performed by a licensed broker or agent are not 100 percent accurate.
· AVM (Automated Valuation Model) technology is not 100 percent accurate.
All these methods, when properly executed, can provide a good indication of value.
However, we need to keep in mind that estimating value is a combination of art and science. Regardless of how scientific the approach, the actual sale price is subject to the unique variables of each property transaction: property condition, upgrades, current market conditions, circumstances of the sale and individual tastes.
For property owners, pricing correctly is a key to a successful sale.
1. Under-pricing can result in a fast sale, but carries the risk of leaving money on the table.
2. Sellers who price too high may find their properties lingering on the market, and statistics show that values can erode at a rate of about 1.5 percent per month.
3. Longer sales also increase the likelihood of a “distressed sale” when sellers become frustrated or encounter difficult financial circumstances.
Likewise, buyers should avoid emotional purchases. Overpaying because of "falling in love” with a home is common.
The science of AVMs
To determine a good baseline value for a property, Homekeys searches thousands of property records for comparable sales or “comps.” Homekeys uses advanced statistical models and proprietary algorithms and formulas to find the best comparable properties available. In addition to property characteristics, the system evaluates how recent comparable sales are and how close properties are from the property being evaluated. Once a base property value estimate is determined, it’s time to check active listings to see what similar properties are selling for.
The art of AVMs
The art portion of estimating value begins with understanding how comparable sales and active listings compare to the property being evaluated. Since they are nearby, it’s a good idea to drive by comparable sales and listed properties to see how they compare. To help you stay organized, you may want to use a buyer checklist when visiting properties.
After researching comparable sales and active listings, it’s time for the personal touch. Sellers know their own property and neighborhood better than anyone, so they are able to adjust base values according to individual property characteristics. Buyers can make similar adjustments as they visit properties to help formulate an asking price.
Depending on your research, a “market adjustment” may be warranted. If active listings are priced higher than your base estimated value, an upward adjustment may be appropriate. If prices are lower, a downward adjustment might be in order.
Finally, Homekeys enables buyers and sellers to make other value adjustments based on individual property characteristics and condition. Based on a seller’s knowledge or a buyer’s research, appropriate value adjustments can help both parties arrive at a fair selling price.
And though no property valuation system is perfect, AVMs can provide objective valuation estimates quickly and inexpensively, and the technology is improving all the time. As AVM technology continues to evolve and improve, it may prove to be a key to less-stress, more enlightened real estate transactions in the future.

Succesful Sellers Think like Buyers

The most succesful sellers are the ones that think and act like buyers.
This is what they do:

1. They search for homes that are for sale in their neighborhood in sites like http://www.homekeys.net/. This site provides listing details and free and unlimited access to comparables and most likely property market values. Maps are also included. These allow you to see the location of each property.
2. They drive around and identify those properties that appear to be comparable and assess the external condition and comparability of those properties. They also look around for FSBO properties. FSBO sellers are actively competing with properties listed in the MLS . Potential sellers can contact FSBO owners directly and inquiry about asking prices as well as other relevant factors.
3. They see their home thru the eyes of the buyers. We all believe what we have is better than what it actually is for others; thus, we need to be realistic. Value like beauty is in the eye of the beholder. Just because we like it does not mean the rest of the world will. How will a potential buyer react when visiting your home? Just think about your reaction when you are buying . And others will not be any different.!
4. They establish the asking price by incorporating all the information gathered during the fact finding process. What will I be competing against? What are my goals? Do I need to sale? If so, how quickly? Many of our clients decide to sell by owner and we assit them in the marketing of their property. The fact is that you can be effective selling on your own as long as you are realistic! There is not a need to sacrifice quality for service nor a need to pay a commission of 6%.
5. They are as factual and unbiased as they can be. They are good at removing the "emotional factor" from their decision. This is easier said than done but it must be done.

These are difficult times; be thoughful and honest in your process and you will be succesful.

Homekeys / Redfin - High Tech Real Estate Moves In

60 Minutes produced a report about on-line real estate companies. Though Homekeys was not mentioned, Homekeys represents one of the first companies in the country to provide on-line real estate services such as Buyer Rebates and low cost MLS Listings. If your not sure how on-line real estate companies like Homekeys compare with their full service Realtor counterparts then watch this video.

http://www.cbsnews.com/sections/i_video/main500251.shtml?id=2796105n