How to Use Real Estate Market News for Home Valuations

One of the most significant challenges agents face
is providing a fair assessment of a property’s value. The house must be priced
right to get buyers to bite. Undervaluing the home could mean the sellers lose
thousands of dollars. Knowing current real estate
values is integral to providing the highest level of service to clients.
Learn how to use real estate market news for
home valuations.

Know the Difference Between Evaluations and
Appraisals

An evaluation determines the market value of a
property
based on
what a buyer will pay for it now. Valuations determine market value based on
recent past transactions. To prepare an evaluation, an agent researches the
sales prices of homes sold over the past six months within an approximate radius
of one mile. The homes are compared based on size, location, age, and amenities
to come up with a reasonable value for the house. A professional appraiser
assesses the value of the home based on a series of calculations to figure out
the property taxes. Evaluation is what helps agents come up with a fair listing
price.

Turn on the News

Newsworthy factors influence the real estate values. Political, economic,
environmental, and social factors all play a role in how much a house is worth
in the current marketplace. For example, home values may plummet during a
recession with a high rate of unemployment when people are unable to afford to
buy a property. However, this may increase the number of people looking for
rentals. Or an area with several recent storms might have damaged homes and
businesses that were abandoned, lowering neighborhood property values.
Understanding what’s happening in the country and world helps agents
realistically assess property values and communicate effectively with clients
about them.

Buyer’s or Seller’s Market

Savvy agents review the financial news to determine
whether it is a buyers or seller’s market. During a buyer’s market, homes may
sell for less than during a seller’s market. In a buyer’s market, an eager
seller may choose to wait it out and see if the property values increase in a
next year or two. Buyers can get amazing deals at this time, especially if
mortgage interest rates are low. In a seller’s market, a shortage of inventory
can create bidding wars, causing homes to sell at their current value or higher.
Navigating these changes is essential to ensure clients are in the best
possible financial situation to buy or sell.

The Rule of Supply and Demand

Beyond the state of the market, the basic rule of
supply and demand applies to home valuations. Real estate market news often
focuses on supply and demand to keep agents informed about pricing. When the
amount of available properties is high, and the demand is low, the price of the
homes is low. On the other hand, if the supply is low and the demand is high,
the prices for homes go up. Agents need to determine the supply and demand in
their neighborhood to accurately assess property values. Underestimating a
property’s value is a disservice to the sellers. And failing to negotiate a
fair price means the buyers are paying more than the property is worth.

Four Critical Factors

Four critical factors define the real estate market.
First, demand reveals the number of homes wanted in an area at a particular
time, and specific price, as well as how willing and able buyers are to
purchase them. Second, is usability and whether the home requires repairs and
renovation to occupy it. Then the ease of transfer is a factor because the
property must be legally able to change hands without encumbrances. Finally,
the rarity of the property determines its market value. For example, if there
are a few luxury homes in a neighborhood with two dozen potential buyers, the
value of the homes will increase. Experienced agents review these four factors
during the valuation process of a property to make the most accurate
assessment. Affiliated Better Homes and
Gardens® Real Estate agents
have access to innovative learning tools to help them learn how to make
accurate assessments.

Collect Local Data

Some of the most valuable real
estate market news is the local data that defines the current market
conditions in a neighborhood. Explore the average volume of properties sold in
the past six months, along with prices and appreciation rates to determine
where the market is headed. Review the features of the recent properties that sold
quickly to see what buyers want. And keep a finger on the pule of the social,
economic, and demographic conditions that impact who can buy and sell a
property. Knowing the local target market gives agents the facts to best assist
their clients. Resources for agents to check include MLS, Federal Reserve
System, Bureau of Labor Statistics, Census Bureau, mortgage bankers, title
companies, school district, county offices, tax appraiser’s office, and Chamber
of Commerce. Determine the times of the year when properties sell for the most to advise your
clients on when the buy and sell.

Knowledgeable agents
recognize the importance of studying recent real estate
market news to determine current real estate
values. An agent who can accurately evaluate homes is sure to attract
plenty of clients through referrals and positive word-of-mouth.

The post How to Use Real Estate Market News for Home Valuations appeared first on Clean Slate.

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