What Is My Home Worth? The Number Every Homeowner and Seller Should Know


233LorraineBlvd.0005 (2)FROM REALTOR.COM: Have you ever wondered “How much is my house worth?”? If you’re hoping to sell your home, knowing your property’s value is essential for pricing it right to make buyers bite. Or, maybe you don’t want to sell your home right now, but are just curious whether your real estate investment has risen in value (which would merit some much-deserved back-patting). 

In either case, having an accurate grasp of your home’s estimated market value can come in handy. And there are a variety of ways to do that, many of which are free and easily within reach online. Here’s how to find that magic number, and why having an accurate estimate matters whether you want to sell your home or own it for the long haul.

How real estate experts determine their own home value estimates

Real estate agents specialize in answering the question “what is my home worth?” for their clients, which they do by running a comparative market analysis. This process involves finding similar properties (“comps”) that sold within the past 90 days.

The most accurate comp is a home that’s nearby, similar to yours in square footage, and has the same number of bedrooms and bathrooms. (Ideally, the lot size is also equivalent, but that’s more important in rural areas, where homes are set on multiple acres.) Once your agent finds a few comps, then she averages those figures to come up with a baseline of your own home value.

“You should always look at the sale prices of other listings in your community,” says Chris Dossman, a real estate agent with Century 21 Scheetz in Indianapolis.

For instance, “if your neighbor’s home is listed for $400,000 and you 

want to list yours at $500,000, you’d better be able to clearly explain the difference to prospective buyers.” Or else adjust your number accordingly.

What is my home value to a buyer?

Sellers need to consider how home buyers search for properties online. Let’s assume your home’s fair market value is $503,000. Yet Dossman points out that many people search for homes on the web using $20,000 or $25,000 increments. The upshot? Listing your home for $503,000 could prevent your listing from being seen by buyers who are searching for homes in the $475,000 to $500,000 bracket, so asking for $500,000 might generate more traffic—and maybe even a bidding war to push that final number well above your expectations.

Also, avoid listing your home at an odd dollar figure (e.g., $999,000 instead of $1 million). While retailers and as-seen-on-TV purveyors of the Miracle Mop effectively present product prices ending in $0.95 or $0.99, Dossman says the same approach doesn’t apply to real estate.

“It’s hard to justify awkward pricing,” Dossman adds. “It’s just confusing to buyers.”

Try to remain objective

“Sellers always think that their home is worth more than it is, because of their personal attachment,” says Dossman.

Indeed, it’s hard to boil down years or decades of memories in a home to a number. It’s also hard to accept that your home is worth less than what you paid for it, or that you can’t just tack on the full dollar amount of the renovations you’ve made. On average, renovations will reap you only a 64% return on investment, although that varies based on the type of upgrades you’ve made.

Why it’s important to know how much your house is worth

OPEN dennyEstimate your home’s value as too high, and it could wind up sitting on the market. That’s a big problem, because a property that goes unsold for an extended period of time (e.g., more than 30 days) often becomes stigmatized.

“Buyers get suspicious when they see a house that’s been on the market for a while,” says Dossman. “They think that something is wrong with the home.”

If that’s the case, the seller may have to make a significant number reduction—sometimes dropping the number below market value—in order to nab a buyer.

Pricing your home below market value in an attempt to stir up interest and generate multiple bids can also backfire. Granted, that strategy could work in a hot seller’s market, but underpricing your home frequently leads buyers to assume that your home is worth only its list price, says Dossman.

Your best bet: Know what your home is worth, and list your home close to that figure—aka its market value. When in doubt, turn to your real estate agent to help you cut through the haze and help you pinpoint the right price.

Photo by Sharon McCutcheon on Unsplash

Foreclosure vs. Short Sale: What’s the Difference?

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What is the difference between a foreclosure and a short sale?

Foreclosures and short sales are both options for homeowners who fall behind on mortgage payments, but it’s important to understand the difference between these two processes. (By Cathy Ericson for

So if you’re struggling to pay your mortgage and aren’t sure what to do, allow this primer on foreclosures vs. short sales to set you straight. Here’s what these things are, their pros and cons, plus how to tell whether a short sale or foreclosure is the better option for you.

What is a short sale?

rawpixel-761473-unsplashshort sale happens when a homeowner owes more on the mortgage balance than the market value or sale price of the property at the point the owner wants to sell. For a short sale, the homeowner is essentially asking the mortgage lender (typically a bank) to accept a lesser amount than the total mortgage owed. For example, if the homeowner sells the house for $250,000, but the remaining mortgage loan balance is $300,000, the seller is essentially $50,000 “short” on paying the lender back. That’s a short sale.

Like other homes for sale, a short sale property will be listed by a real estate agent (typically one who specializes in short sales).

For the seller, one thing you’ll want to watch out for is a deficiency judgment. A deficiency judgment is where, after a short sale ends, the mortgage holder seeks to recover the “deficiency” (the money it lost in this home sale) through a court order placing a lien on the debtor for further money (so in this case, a mortgage lender acts as a lien holder). Some states outlaw this practice, but you should ask, just so you aren’t blindsided by it later.

What is a foreclosure?

Foreclosure is a legal process that happens when a homeowner (although “borrower” might be a more appropriate term from the perspective of the lender) is unable to make mortgage loan payments for a significant period of time.

After three to six months of missed mortgage payments, a lender will issue a Notice of Default with the County Recorder’s Office. This notice is to let the borrower know he is at risk of foreclosure—and when they foreclose, the current owner will be evicted.

After receiving the Notice of Default, borrowers can try to settle their loan debt with their lender either through a short sale or by paying the mortgage balance they owe. This period is called pre-foreclosure and can last anywhere from 30 to 120 days after receiving the Notice of Default.

If the debt is not recouped, lenders will step in and foreclose on the property. To foreclose, they’ll schedule a foreclosure auction to sell the house to a third party. Foreclosure auctions will be advertised in local newspapers and are typically held at either the property or the local courthouse, says Cathy Baumbusch, a real estate agent with Re/Max Allegiance in Alexandria, VA.

If no one buys the home at auction, the lender becomes the owner and it’s considered a bank-owned or REO (real estate–owned) property.

Another option to avoid foreclosure is to do a deed in lieu of foreclosure. A deed in lieu of foreclosure is a transaction where a homeowner transfers title or ownership of the property to the lender in exchange for being released from their loan debt-free and clear.

What is the difference between a short sale and foreclosure?

jessica-furtney-244838-unsplashShort sale and foreclosure are similar in that they’re both financial options for individuals who own homes but find themselves in financial distress. Both also have a negative impact for your tax return, credit score and credit report, and future prospects getting a loan.
But short sales and foreclosures differ greatly in process. A short sale transaction occurs when mortgage lenders allow the borrower to sell the house for less than the amount owed on the mortgage. The foreclosure process occurs when lenders repossess the house, often against an owner’s will.
Timing also differs: Short sales can take up to one year to close, while foreclosures generally move along much faster because lenders are intent on recovering the money they’re owed.

Furthermore, a short sale is far less damaging to your credit score than foreclosure. In fact, people who go through the short sale process can usually buy another house without having to wait, although securing a second mortgage might be more challenging. Foreclosure, on the other hand, will stay on your credit report for seven years. You’ll also have to wait five years to buy another house.

If paying your mortgage has become a real challenge, the smartest step to take is to talk to your lender to discuss your options. Chances are, your lender will be able to offer the best plan of action based on your unique situation and the laws in your state.

How short sales and foreclosures work for buyers

Short sales can be a good deal for bargain house hunters, but buying a short sale can be a headache.

“I wouldn’t recommend purchasing a short sale for first-time buyers, who may get frustrated with the extra paperwork and long waits,” says Marlene Waterhouse, owner of Short Sale Solutions.

OPEN dennyThe average short sale takes around 90 to 120 days, and sometimes even longer. Why? Mortgage lenders often won’t approve the sale without buyers agreeing to its demands like paying for many additional fees such as repairs, wire transfers, and closing costs. These are all costs the seller would typically be on the hook for, but in a short sale, the bank is stuck with the bill. Therefore, to reduce its costs, the bank may try to negotiate these costs with the buyer.

Other than the involvement of the bank, a short sale will proceed much like other sales. Buyers can get a mortgage and have the opportunity to seek an inspection.

Foreclosure sales, however, are different. For one, foreclosure properties can be purchased only with cash; no traditional loan will be granted for a foreclosure.

While a foreclosure can be a great deal for home buyers (particularly foreclosures that have been taken over by the Federal National Mortgage Association, better known as Fannie Mae), they also come with some risk, says Baumbusch.

“Keep in mind that a foreclosed home sold at the courthouse is bought without warranty and sight unseen,” she adds.

That means you will not be able to have a foreclosed home inspected for structural problems, mold, infestations, or other issues with the house. You will also assume all liens that might be tied to the property.

Written By Cathy Ericson for

Photo by rawpixel on Unsplash
Photo by Jessica Furtney on Unsplash


MONEY: 12 Rules to Follow When Buying a Home

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FROM MONEY.COM: It’s been a rollercoaster dozen years for home prices—and some experts think another rough patch is in the offing. (Written By Johnatha Clements).

valentina-locatelli-130318-unsplashSince the housing crisis began in mid-2006, national home prices have plunged by more than 25% of their value — only to bounce back, rising more than 50%. While that may sound like a significant recovery, it’s a lot less impressive when you consider that more than a decade elapsed in the meantime. Today, home prices are about 12% above where they were in 2006, equating to a gain of less than 1% per year.

Could we be facing another dip? According to the National Association of Realtors, home sales fell 10% over the past year, in part because of rising mortgage rates. That’s worrisome: Slowing home sales often precede a fall in house prices. But my goal here isn’t to scare away potential home buyers. Quite the opposite: I think everybody should strive to become a homeowner—but they should do so with their eyes wide open.

What do I mean by that? Real estate discussions almost invariably fall hostage to anecdotal evidence. We all know folks who supposedly made a mint in real estate, as well as people who lost their shirt. But forget the anecdotal evidence, and instead focus on statistics and commonsense.

To that end, here are my 13 rules for real estate:

Rule 1:

Homeownership isn’t as safe as it feels. A house is a big, leveraged, undiversified bet—arguably riskier than owning a diversified stock portfolio. Yet it doesn’t feel that way. Why not? Partly, it’s familiarity. We look around our house and see the value that’s there. And partly, it’s a money illusion. If we got daily updates on our home’s value, like we do on our stock portfolio, we wouldn’t be nearly so sanguine about our huge real estate wager.

Rule 2:

We shouldn’t buy unless we can see staying put for at least five years—and preferably seven years or longer. Buying and especially selling real estate involves steep transaction costs, and we need many years of price appreciation to overcome that hit.

Rule 3:

Over the long haul, home prices nationwide should rise roughly in line with per-capita GDP. Why per-capita GDP? That’s a gauge of our ability to pay. Sure enough, over the past 40 years, per-capita GDP has climbed 4.5% a year—and home prices are up 4.3%, according to Freddie Mac. Meanwhile, inflation clocked 3.4% annually.

Obviously, we’ll get years when home prices climb faster or slower. But over the long haul, we shouldn’t expect to do a whole lot better than a percentage point or so a year more than inflation.

Rule 4:

The land underneath our homes should appreciate, but the dwelling itself will depreciate—and we’ll need to fork over hefty sums just to keep up with the general increase in home prices. As a rule of thumb, expect to spend a sum equal to between 1% and 2% of a home’s value on maintenance each year.

Rule 5:

Any gain in our home’s value will likely be largely or entirely offset by transaction costs, maintenance, property taxes and homeowner’s insurance. Subtract those costs from our home’s annual price gain, and we probably aren’t keeping up with inflation and there’s a good chance we’re losing money.

Rule 6:

2400GramercyPlace.0003The benefits of leverage are often offset by the cost of leverage. Homeowners may put down just 10% or 20% of a home’s purchase price—but they collect 100% of any price appreciation. Result: Even prosaic property price increases can be transformed into wondrous gains—or so it seems.

Let’s say we might put down $30,000 on a $300,000 home. If the home’s price rises 30% to $390,000, our home equity would soar 300%, from $30,000 to $120,000. But how much did we pay in mortgage interest to get that leveraged gain? Often, the total interest paid rivals the increase in home equity.

Rule 7:

The mortgage-interest tax deduction has always been overrated—and, today, that’s truer than ever. If we pay $1 in mortgage and we’re in the 22% tax bracket, we only save 22 cents in taxes, which means the other 78 cents is coming out of our pocket.

This assumes we itemize our deductions. But with the 2019 standard deduction at $24,400 for couples filing jointly, many homeowners will find their total itemized deductions are less than their standard deduction—which means they’re getting zero tax benefit from all the mortgage interest they pay.

Rule 8:

If you’re a homeowner with a fixed-rate mortgage, what you really want is inflation. Why? That inflation will likely drive up both your home’s price and your salary, while leaving your mortgage payment unchanged. That means you can repay the mortgage company with depreciated dollars, while having more disposable income for everything else.

Rule 9:

While a home’s price appreciation and mortgage-interest tax deduction will likely prove disappointing, homeowners enjoy one huge benefit: They get to live in the place. How much is this imputed rent worth? Think about how much you’d collect each year if you rented out your house.

Rule 10:

All homes should be priced to deliver the same expected total return. Folks will talk about real estate in, say, San Francisco and Silicon Valley, as though these are magical markets that somehow defy economic norms.

The reality: The total return—the combination of price appreciation plus rent or imputed rent—should be similar across property markets. In other words, in highflying real estate markets, rents tend to be modest relative to home prices, so total returns aren’t unusually high. This has been borne out by academic research.

Rule 11:

A paid-off home is the cornerstone of a comfortable retirement, for two reasons. First, by paying off our mortgage, we eliminate a major expense, making retirement more affordable. Second, thanks to the forced savings that come with paying down a mortgage’s principal balance, we eventually come to own a major asset free and clear. That asset can then help us to finance our retirement, either by trading down to a smaller place or taking out a reverse mortgage.

Rule 12:

Hollywood-HillsRemodeling is a money loser. If we undertake home improvements, we’ll increase the value of our home—but by less than the dollars we spend. For proof, check out Remodeling magazine’s annual cost vs. value survey. It analyzes 22 home improvement projects. Depending on the project, if we sold soon after making these home improvements, we might recoup as little as 50% of the money spent.


Written By Jonathan Clements  for
Photo by Valentina Locatelli on Unsplash

NEWS: Home Sales Plunge in Southern California as Prices Inch Up


FROM CURBED LA: For Los Angeles’s real estate market, 2018 ended with a whimper. Just 5,291 homes sold in December, representing a 20 percent drop since the same time last year, according to a new report from CoreLogic.

tiago-rodrigues-390292-unsplashThe county’s median sale price—$581,500—was slightly higher than in December of last year, but down 3.1 percent since November. It was also more than 5 percent below levels reached in August, when LA’s median sale price of $615,000 tied an all-time record.

Year-over-year, prices are up just 2 percent in LA County, and a measly 1.1 percent across all of Southern California.

Across the region, the number of homes and condos sold has fallen off dramatically since last year and are now at their lowest level since last year. The 15,781 December sales in Southern California was the lowest for that month since 2007, at the start of the subprime mortgage crisis.

Housing analysts predicted that LA’s red-hot housing market would settle in 2018, and the prognosis for the year ahead looks much the same. Still, December’s decline in sales was particularly sharp.

CoreLogic analyst Andrew LePage points out that more homes typically sell in December than in November. This year, though, sales dropped 8 percent across all of Southern California between those months.

“This drop in activity reflects a variety of factors,” says LePage. One of those factors is mortgage interest rates, which climbed for most of 2018, limiting the ability of buyers to stretch their budgets.

rawpixel-1137301-unsplashLePage also says that “some would-be buyers remain priced out or unwilling to buy amid concerns that prices have overshot a sustainable level.”

Though home prices still haven’t reached pre-recession levels when adjusted for inflation, they are now rising at the slowest level in years. December’s year-over-year median price gain across all of Southern California was the lowest since 2012.

One reason for that could be that the recent drop in sales has disproportionately affected higher-priced homes. LePage suggests that some wealthy buyers may have held off on buying close to the end of the year due to concerns about the stock market.

Unfortunately for prospective buyers, that means that prices for more affordable homes are probably still climbing relatively steadily as 2019 gets underway.


Photo 1 by Tiago Rodrigues on Unsplash | Photo 2 by rawpixel on Unsplash | 

How To Properly Price A Home: Using Analytics And Intuition To Get It Right

Aerial view of businessman using computer laptop

BY FREDERIC PETERS FOR FORBES: Pricing property right blends art and science. Particularly in a market like this one, in which both sales prices and sales volume have softened from month-to-month, analysis, while critically important, can only help so much.

Aerial view of businessman using computer laptopWhile we know a sale of a similar property took place three months ago, how do we compare this price to TODAY’s property value? Values in today’s market change from month-to- month. Since prices do not become public until after a sale closes, and since a period of three to four months often elapses between contract signing and closing, sales prices are already out of date by the time they become public. 

In this environment, what are agents and sellers (not to mention buyers) to do? Here are a few suggestions:

Use Your Relationships. The most useful comparable sales in a changing market are always those which have gone into contract during the past few weeks or month. Agents who have cultivated relationships within the industry can contact fellow agents whose sales have gone into contract recently to find out what the purchase price was. Even if those agents are reluctant to share an exact price, they will usually give you a sense of what their property received if you have been collegial in your behavior with them in the past. It’s one of many reasons why it’s always better to be a good citizen rather than a difficult one.

StockSnap_IS4SWQJXQTAvoid Aspirational Asking Prices. Even in a down market, many asking prices are aspirational rather than realistic. They don’t provide useful guidance as to proper pricing; in fact, often they present a cautionary tale in how pricing incorrectly can lead to months on the market. This is often the highest and best use of asking price information in discussion between agent and seller: these prices can demonstrate what NOT to do.

Remain Conversant In The Analytics.  In markets like New York City, different areas and types of property have experienced different levels of decline. The sophisticated agent acts like an appraiser, taking highly local recent sales information and analyzing it to arrive at pricing per square foot which takes into account condition, location, special features like views and outdoor space, and sales velocity within the particular submarket. If necessary, the numbers can then be discounted to account for drops in market value since recent transactions occurred.




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