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Updated about 10 years ago on . Most recent reply

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85
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Chad Duncan
  • Rental Property Investor
  • Portland, OR
49
Votes |
85
Posts

Home market value...

Chad Duncan
  • Rental Property Investor
  • Portland, OR
Posted

How can you find a homes true market value? 

I know about comparables but what if nothing compares? 

How do you tell if your paying too much per sq ft? 

What happens when the seller is listing his sales price for double what the property is worth?

Thanks 

Most Popular Reply

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171
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116
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Nicholas Miller
  • Residential Real Estate Broker
  • Fort Wayne, IN
116
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171
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Nicholas Miller
  • Residential Real Estate Broker
  • Fort Wayne, IN
Replied

The market value is the price at which someone will buy a property NOT the zestimate, assessed value or asking price. 

If you are looking in a cookie cutter addition where every house is basically the same and all of the houses are within a few years of each other finding the market value is simple you just look at what identical properties have sold for over the past 12-24 months.

Moving out of the predictable additions makes the process a little more difficult however if you are looking in areas where a majority of the the homes are being bought by owner occupants the process is still relatively simple. If you have access to the MLS do a search for homes in the same sub-division of comparable size and comparable amenities and you find the market value. If you do not have access to the MLS go to your local assessors office and find out what online tools they have to research "sold" properties.

Going into areas where a majority of the homes are being bought by investors and the market value starts to become a lot more difficult but can normally be calculated based on a cap rate based on the properties performance or anticipated performance.

In distressed areas you will find that most homes do not sell on the MLS but many change ownership through FSBO deals, tax sale, auctions, wholesale deals... In these areas finding a comp can be difficult but possible however instead of using the MLS one would want to use the information provided by the local assessors office since the MLS will only show properties that have sold on the MLS.

Going away from traditional structures and move toward non-traditional structures...  Finding value seems like a shot in the dark.  I own an old church building which I converted into a duplex.  The building will not be easy to finance (thats one of the reasons I was able to pick it up for $16,000 a few years ago) which made it an inexpensive purchase but more difficult to sell.  The building brings in (in my opinion) higher than market rent as the structure is unique as is the space.  So setting a market price based on a cap rate would be the easiest way to calculate the value however investors who want liquidable assets will not want this structure since it is not a...  Traditional structure.

Here are some panoramic shots of the main room in unit 1.  The area is huge and this is only half of the apartment.  This area was once the sanctuary but we put in two large bedrooms, dropped the ceiling and added the support wall down the center (the divide between the kitchen area and the living area).

This is the street view of a building we are negotiating on right now...  Assessed value is just a little over $200,000, the most recent appraisal was $180,000 however the building has no tenants so there is no income history to use to negotiate value based on asset performance.  

All this to say, you need to clarify your question. What kind of building are you looking at? What is the neighborhood like? Are there a lot of homeowners in the area or are there a lot of renters in the addition? How do homes sell, do most sell on the MLS or do most transactions take place off the MLS?

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