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©
2002 Ruth E. Campbell. |
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Frequently Asked Questions Owning
Your Home - Q & A Q: What is the difference between market value and appraised value?
A: Appraised value is a certified appraiser's opinion
of the worth of a home at a given point in time. Lenders require
appraisals as part of the loan application process; fees range
from $200 to $300. Market value is what price the house will bring at a given
point in time. A comparative market analysis is an informal
estimate of market value, based on sales of comparable properties,
performed by a real estate agent or broker. Q: How do you increase the value of your property?
A: The biggest factor outside of a homeowner?s control
is market conditions. But other issues -- including the condition
of the property, specific home improvements and neighborhood
stability and safety -- can influence property values. The greatest rise in home prices occurs when the economy is
strong and the number of home sales is increasing. Though markets vary, that has occurred twice in recent history
-- in the early 1970s and the late 1980s. However, single-family
homes appreciated much more than condominiums. While overall
market conditions are out of the homeowner's control, other
factors are not. For example, specific home improvements can increase the value
above the cost of the improvements. According to Remodeling magazine,
which publishes an annual "Cost vs. Value" remodeling
report, a remodeled bathroom returns 81 percent to the owner,
a bathroom addition, 89 percent and a master bedroom suite, 82
percent. Remember, quality pays. Well-planned and well-executed remodeling
jobs are a good investment while bad work seldom enhances value
or livability. If you live in a high-crime area, an organized community watch
program not only will lower the crime rate but also have been
known to enhance property values. Q: What are the standard ways of finding out what a house is valued at?
A: A comparative market analysis and an appraisal are
the standard ways consumers, lenders and realty agents determined
what a home is worth. Your real estate agent will be happy to provide a comparative
market analysis, an informal estimate of value based on comparable
sales in the neighborhood. You also can research "the comps"
yourself by checking on recent sales in public records. Be sure
that you are researching properties that are similar in size,
construction and location. This information is not only available at your local recorder's
or assessor's office but also through private companies and
on the Internet. An appraisal, which generally cost $200 to $300 to perform,
is a certified appraiser's opinion of the value of a home at
any given time. Appraisers review numerous factors including
recent comparable sales, location, square footage and construction
quality. Q: How can I improve the value of my property?
A: The biggest factor outside of a homeowner's control
is market conditions. But other issues -- including the condition
of the property, specific home improvements and neighborhood
stability and safety -- can influence property values. The greatest rise in home prices occurs when the economy is
strong and the number of home sales is increasing. Though markets
vary, that has occurred twice in recent history -- in the early
1970s and the late 1980s. Specific home improvements can increase the value above the cost
of the improvements. According to Remodeling magazine, which publishes
an annual "Cost vs. Value" remodeling report, a remodeled
bathroom returns 81 percent to the owner, a bathroom addition,
89 percent and a master bedroom suite, 82 percent. Remember, quality
pays. Well-planned and well-executed remodeling jobs are a good
investment while bad work seldom enhances value or livability. The safety and security of a neighborhood can affect property
values, too. If you live in a high-crime area, an organized
community watch program not only will lower the crime rate but
give home values a boost, too. Q: Should I add on or buy a bigger home?
A: Consider these questions before making a choice between
adding on to an existing home or moving up in the market to
a bigger house:
Ultimately, the decision should be based on individual needs,
the extent of work involved and what will add the most value. Q: What kind of return is there on remodeling jobs?
A: Remodeling magazine produces an annual "Cost
vs. Value Report'' that answers just that question. The most
important point to remember is that remodeling a home not only
improves its livability for you but its curb appeal with a potential
buyer down the road. Most recently, the highest remodeling paybacks have come from
updating kitchens and baths, home-office additions and extra
amenities in older homes. While home offices are a relatively
new remodeling trend, for example, you could expect to recoup
58 percent of the cost of adding a home office, according to
the survey. Q: Where do I get information on housing market stats?
A: A real estate agent is a good source for finding
out the status of the local housing market. So is your statewide
association of Realtors, most of which are continuously compiling
such statistics from local real estate boards. For overall housing statistics, U.S. Housing Markets regularly
publishes quarterly reports on home building and home buying.
Your local builders association probably gets this report. If
not, the housing research firm is located in Canton, Mich.;
call (800) 755-6269 for information; the firm also maintains
an Internet site. Finally, check with the U.S. Bureau of the
Census in Washington, D.C.; (301) 495-4700. The census bureau
also maintains a site on the Internet. The Chicago Title company
also has published a pamphlet, "Who's Buying Homes in America."
Write Chicago Title and Trust Family of Title Insurers, 171
North Clark St., Chicago, IL 60601-3294. |