The Finest in Real Estate Services

Orlando area residential real estate specialists, covering Orlando, Oviedo, Winter Springs, Lake Mary, Longwood, Altamonte Springs, Maitland, Winter Park, Casselberry, Geneva, Chuluota, Sanford, Apopka, Windermere, Dr. Phillips, Lake Nona.

April  2016

Happy Spring!  The Orlando real estate market is approaching full swing.  Lots of buyers and sellers are active in the market place now.   Starting this month, I’ll discuss the topic of home valuation.

Q:  How do you determine the value of a home?

A:  There are generally 3 approaches to value theory in real estate:  (1) comparable sales (2) reproduction cost (3) income potential.  In residential resale, comparable sales approach is the method of choice.   It uses completed sales to determine the market value of a property.  Assuming the market is efficient and the buyers and sellers act in their own best interest, we can derive value based on how sellers are selling and buyers are buying.  Like stock prices, the supply and demand ultimately drive the fluctuation in price: when demand exceeds supply, the price goes up.  When supply exceeds demand, the price goes down.  A property does not have a fixed value.  Its value changes with time.

Unlike shares of a company’s stock, no two pieces of real estate are exactly alike.  Comparable sales approach takes the available sales that meet the right criteria (sufficiently similar to the subject property, sufficiently close to the subject property, and sale date recent enough to reflect the current market) and compare them to the subject property.  Adjustments are then made based on established guidelines as well as subjective judgments to increase or decrease the value.  For example, if a home that backs up to a road sold at a particular price, an otherwise identical home across the street that backs up to a wooded conservation would be presumed to be able to fetch a higher price (the value adjustment for the conservation frontage).  A common feature in Florida homes is the swimming pool.  We presume a home with a pool will sell for a higher price than an identical home without the pool.

Two crucial factors in doing the comparable sales method correctly are: (1) Selection of appropriate comparable. If wrong comparables are used, however diligent the subsequent adjustments may be, the results will likely be off.  For example, Stoneybrook sales should be used for comparables to a Stoneybrook subject property, not Eastwood or Avalon Park.  (2) Use right adjustment values. Even when the right comparables are selected, if the adjustment values are improper, the result will be off.  For example, once comparables similar in size are selected, the adjustment for difference in square footage is not what general public may expect, it may only be $30-$60 per square foot based on price range of home.

Licensed appraisers are trained to do this based on their professional guidelines.  These guidelines are adhered to in order for the appraisal report to be valid and accepted by the bank which uses this report to assess its risk in making the loan on the property.  

Real estate agents are not licensed appraisers.  Their approach should start in the same objective manner as an appraiser, but there are many additional factors to consider.  Many features in a home have different values to a buyer than to an appraiser.  For example, top-of-the-line appliances in a kitchen will certainly impress a potential buyer, who may be inclined to pay more for this home than a similar one without them, but an appraiser will not appraise the home higher because of the better appliances.  Appliances age and break, and they can be easily removed.  They are personal properties that happen to be in the real property.

So, a skilled listing agent considers all the tangible factors such as features and amenities, as well as intangible factors such as appeal.  He/she estimates what a normal buyer would be willing to pay based on the current market environment. An understanding of market trend is paramount.  In an up-trending market, the last home that sold in the area is the base on price.  In a down-trending market, the last home that sold is the ceiling on price.  In a stable market, the last home that sold is a mirror on price. 

I have to stop here.  I hope the above description is helpful to you. For more details or an evaluation of your home, you can always call or email me. 

Until next month, take care!

 


We Can Make the Difference

Are you feeling overwhelmed? Buying or selling a home is one of the biggest decisions you'll ever make. A professional who is understanding and dedicated to your needs is an invaluable partner in achieving your goals. As full-time agents, we are committed to helping you through the entire process, making your real estate transaction a positive and rewarding experience.

·                     Your best interests are our top priority.

·                     Our focus is on giving you personal attention and the best service.

·                     We know the local neighborhoods, schools, market conditions and more.

·                     We will make your transaction as smooth as possible.


Get the advice you deserve

The Internet is a great place to find information. But it can't give you the in depth local knowledge and personal service of a local real estate agent. The challenges are getting more complex every day.   Finding the right home for the buyer or bringing the right buyer for the seller is only half the process.  Managing the whole transaction; from the skillful negotiation of a contract to finally bringing it to a successful closing takes a full blend of contractual knowledge, transactional experience, patience, diligence, and creativity. You need a professional that is on top of the market who will protect your interests and guide you through the transaction step by step. 


Call for a Consultation today

We would be honored for the chance to help you. Please call or e-mail us for an appointment to discuss your real estate needs. We're looking forward to hearing from you!

Contact Us

Featured Properties

For Sale$650,000
  • 6 Bedrooms
  • 4 Full, 1 Half Bath(s)
  • 4735 Sq ft. (MOL)
  • Chuluota

Today's Rates

Mtg Loan Rate APR
30-yr Fixed 3.66% 3.78%
15-yr Fixed 2.89% 3.04%
1-yr Adj 2.73% 3.39%
* national averages

Mortgage Calculator

$
%
%
yrs
$