Real Home Values are Determined by the Market

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Recent legislation under the Truth In Lending Act has made home appraisals more consistent with actual home values compared to the low-ball appraisals that many homeowners were receiving. However, even with an appraised amount more consistent with the homeowners wishes, sellers are unlikely to get their asking price if it is not in line with the market trend for their area. Whether a seller has determined the price of their home from a private appraisal or from the county’s property tax appraisal department, when it comes time to sell, market value is the only value that matters.

Kyle Eastland explains what the real value of a home is:

“In Real Estate, you have three basic values: an appraised value of the home, the county tax-appraisal value and then the market value of the home. All are important, but in the end, only one truly matters. I hear all the time, ‘My house was appraised for this,’ or ’I’m not paying that much since the tax value is less.’ When buying or selling a home, the only value you have in the home is what someone else is willing to pay for it! Let’s break them down. The appraised value of your home is determined by a licensed home appraiser, based on his judgement, experience and comparable sales in the area. This is usually (hopefully) a number slightly higher than what the house is selling for. If the house does not appraise for at least the sales price or more, the buyer will have to come up with the extra money, the seller will have to come down on the price, the buyer may lose all financing, or the seller can put it back on the market and hope to attract a  different buyer. This seems to rarely happen in Waco, but it has happened to me twice in my short-but-not-long Real Estate career. One situation was worked out just fine, the other fell apart faster than you can blink. Check with your lenders to make sure they use licensed and experienced appraisers!”

With online websites now providing home estimates, the number of homebuyers and sellers with their own home value approximations has certainly gone up. In fact, many consumers expect these numbers to reflect what they can buy or sell for. However, all to often, REALTORS® are left to explain the inaccuracy of many of these online estimates by using local market data.

Click through to read Kyle Eastland’s full blog.

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