How To Analyze A Properties Valued Worth In Today’s Market

With how “hot” the current real estate market is, it’s understandable that we’re seeing records being broken with appreciation and value throughout the United States.

Really, there is no surprise. If you’ve ever noticed, real estate tends to repeat a cycle of ups and downs. Usually when it’s on the up, it tends to gravitate to higher values each and every time before eventually stabilizing itself out. If we were to just adjust the real estate value to inflation, we’d have an even higher amount of adjustments.

If you were to buy a house in the 1920’s, between the inflation and market adjustments, you’d probably purchase the house originally for $2,500 but would now be worth around $600,000!

According to the National Association of Realtors, the past 10 months have shown an increase in the average home value by 16%!

How exactly should we tackle analyzing deals in this ever changing market?

In these times, you have to make sure that you do the best you can with the available tools and resources. However, the decision will always belong to the current market on how much it is willing to pay at that given time.

Here’s some tools to help on your journey:

• - Realtor.com, Zillow, & Redfin: Be sure to check out the sales reported in your chosen area/market that’s comparable, in size and age, to your subject property. Focus only on recent sales (3 -6 months max). Loosely take into consideration the “suggested value” (otherwise known as “Zestimate” on Zillow) because things like improvements, specific block/area, and other economic factors are not included.
• - : The agency provides a calculator that can help track adjustments in values between the sales and estimates. Not only do they have this tool but they also provide other insightful information like top 100 metro area ranks and even the latest quarter appreciation map.
• - Multiple Listing Service (MLS) & Other : The MLS has always been every agent and investors go-to resource when looking for comparables and the prices at which other properties are sold at. Unfortunately for investors, this system is strictly available only to licensed Real Estate agents. Fret not, Propstream pulls data from the MLS and is accessible to investors and agents alike.With systems like this, you as an investor won’t have to worry about constantly asking agents to help find comparables.

There are some other things that you may want to consider which is the supply and demand in your chosen market. Some areas contain constant bidding wars from buyers looking for available homes. Most often the prices are higher than the asking price from the seller. While in other areas, the atmosphere is more laid back and buyers take the time to consider the reasonable value of a property before they submit their initial offer.

In either scenario, the market will still always be the deciding factor in the amount people are willing to pay for their property. It’s always best to come up with a best guess-estimate based on the tools and knowledge suggested above.

As a seasoned or new investor, you always want to try and replicate an ideal situation where you’re making profit and providing a win-win experience for everyone on board.