How to determine market value of a house?

[Natalie C.]

Hello! Lurker of several months here, first time poster. Currently own 2 homes - we live in one, rent out the other. My question is unrelated to rentals, however. Somebody please let me know if this is beyond the scope of the forum! Also, I am quite new to real estate, so I appreciate your patience with my post!

A family member passed away in July and my two brothers and I inherited the house. We three siblings all get along very well. There was no will and thus we are going through probate.

The home is located in a hot area in Oakland, CA. The deceased family member was a MESSY hoarder, so the house is still packed with his belongings, garbage, and rat poop. We currently do not know how sound the foundation/bones of the home are.

Our plan had been to go through inspections, clean it out, and fix it up so that it is in livable condition, and then put it on the market. Realtors we've spoken to believe it may end up going for $1-1.2m.

Last night one of my brothers informed my other brother and myself that he and his wife are now interested in buying us out and moving into the house. We 3 siblings all want to be fair to each other, so if my brother ends up buying us out we do not want him to over- or under-pay, and the two of us getting bought out do not want to be over- or under-paid.

My question is this - is there any way to determine the market value of a house without actually putting it on the market? My feeling is that this will be tricky to do, especially in a neighborhood with an incredibly hot market.

Does anybody have any thoughts on this? I would love anybody's input!

Thank you so much!

[Chris Mason]

Originally posted by @Natalie C.:

My concern about the appraisal is that it seems arbitrary - when a house gets appraised on closing, I've seen the appraisal just come in as whatever value the house was sold as.

The market can be so hot that to a degree I don't fully trust what a realtor suggests. My brother sold another home in the area - listed it for $969k based on comps and before the open house even took place had an offer for $1.1M.

The house is in such need of getting fixed up I get concerned that offers will be a little bit more unpredictable....

That's because, on purchase transactions, the purchase contract itself is considered a data-point. Most appraisals come in right at value. As they should, think about what the definition of "market value" is. :)

And then on a refinance, you have guys like me putting a value in too. That's not considered a valid data-point (for good reason, I just put in whatever number would most benefit my borrower, heh), but appraisers are still human.

For this one, you'd want to hire the appraiser yourself, and not give them a number. Let them truly develop an independent opinion of market value.

For $50, one Bay Area local AMC will do "property prequals." Basically a drive-by appraisal that assumes the interior is in good condition.