A quick guide to evaluate residential property

A quick guide to evaluate residential property

Many of my friends ask me how to evaluate their home after they learn about my years of experience in real estate. The bad news is it takes years of practice to master the art of evaluation. The good news is, if you have enough data you can get a good idea of the value of a home.

Note the facts

You need to note all the facts about the home you are evaluating and write them down. What is the heated and cooled square footage? Do you have a pool, FP, porches, etc.? Check your local county property appraiser’s web site. They are a great resource for determining square footage and other pertinent facts like lot size, porch size(s), and other amenities.

Know Your Neighborhood

You want to determine what might influence the values in your neighborhood. Do you have highly rated schools? Do you have a garbage dumb nearby? Do you have any pending assessments? You want to determine anything that might influence the value of the property negatively or positively.

Find comparable sales in close proximity

I see this rule broken by real estate agents and appraisers all over the country. You need to focus on sales that sold within the last 12 months in the tightest proximity possible. In a perfect world, you would have an identical home that recently sold next door with all the same amenities. This is not normally going to happen, but you get the idea of what you are looking for. You should try to find homes that are within 15-20% of your subject’s square footage, located within a mile or less and with similar amenities.  Pay attention to school districts, this can have a huge impact on value if you go outside of your subjects school area.

Look For Comparable Listings

I would recommend looking for online resources like Zillow, Trulia and Realtor.com. The active market is a good indication of how the market is moving up or down. I realize sellers can place some outrageous prices on their homes, but they are typically outliers, you should be able to find a fair amount of appropriate priced properties. Find a few active listings that would be a good alternative choice to your subject.

Determine the Price Per Square Foot

Now that you have the active/sold data in close proximity you can determine the average price per square foot of heated area. This is simple math, take the price of the home and divide by the square footage. If you have enough data, you will see the high/ low and average per square foot price. This is a quick and dirty estimate for pricing your property. I would separate the active per square foot price from the sold per square foot price. Now you can determine how much properties are selling for as a percentage of their list price.

Now you should have a good idea of the values in the neighborhood and rough idea of your home’s value. Understand, this a very basic tool and a seasoned appraiser or real estate agent will use a few different methods. But you are on your way to being an informed buyer.