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Real Estate Value: Knowing yours is Key to Mortgage Success
The value of the real estate you own, whether it is your personal residence or an investment property, is critical to your mortgage and financial success. If the balance on your mortgage is close to or higher than the value of your property, your real estate is not the financial machine it should be. Therefore, if you want to be successful in real estate ownership of any kind, you absolutely must know how to determine the value of your property. Now, there may appear to be a simple solution to this problem, you say. Get an appraisal. Sure, this would work, but appraisals are not cheap. For residential property, they begin around $175 and range to $400. For investment real estate, they can be much higher. Imagine owning 25 houses and needing to know the value for each. You certainly wouldn't want to pay for 25 appraisals. So, here is a simple formula for learning the value of your property. 1. Learn the average rate of appreciation in the neighborhood where the real estate is located. Almost any property will increase in value two to three percent each year, even in depressed areas. So, if your rate of appreciation is three percent and you paid $100,000 last year for your house, it is now worth at least $103,000, based solely on appreciation. You can learn this rate by calling a local realtor. Remember, in affluent neighborhoods, appreciation rates may range from four to eight percent. 2. Estimate the value of any improvements, using a ratio formula. That is, if you improve the structure of the property (new roof, deck, automatic garage doors, windows, etc.), all for about 30 to 40 percent of what you paid for the improvement. Now, this is a variable, depending on location, so don't take this as an absolute. So, last year I put all new windows in my house. It cost $10,000. I assume I can add $3,000 to $4,000 in value to my house. Cut that ratio to 15 percent for cosmetic improvements like paint, carpeting and landscaping. 3. Know comparable sales within one mile and within the last year. For example, if a house one block away that is almost identical to yours in dimension and style sold last month for $150,000, this is a great starting ground for your value. Now, remember your home may have things the other house didn't have, increasing your value even more. 4. Other home's asking price plays a small role. Realtors know their business. If you see a comparable home in the neighborhood, being sold by a realtor, check the listing price. Although not nearly as important as the other parts of the formula, this certainly plays a role in determining the value of your property. So, use this formula, learn the value of your real estate, and you will wield an amazing amount of financial power. Mark Barnes is an investment real estate and real estate finance expert. Get his free mortgage finance course at http://www.winningthemortgagegame.com. Mark is also the author of the new novel, The League, a shocking, sports-related conspiracy. Learn more about his suspense thriller at http://www.sportsnovels.com.
MORE RESOURCES: L.A.’s Real Estate Upfronts Reveal Penthouse A at Rosewood Residences Beverly Hills Hollywood Reporter Erie County real estate transactions Buffalo News Real estate mogul cautions about avoidable mistake when buying a home, explains how to avoid 'drowning' Fox Business Coloradans negotiating lower fees for real estate agents with new law on horizon Colorado Public Radio Massachusetts real estate transactions for Hampden, Hampshire and Franklin counties May 19, 2024 edition MassLive.com Portside Real Estate acquires Belgrade Lakes brokerage Kennebec Journal and Morning Sentinel Illinois real estate: Home sales in Peoria, Tazewell, Woodford counties Peoria Journal Star Worcester County real estate transfers, Sunday, May 19 Worcester Telegram Top 10 Brooklyn Listings: A Flatlands Standalone Brownstoner Berks County real estate transactions for May 19 Reading Eagle REAL ESTATE | Check out Braund's Flooring & Remodeling LLC in West Bend, WI washingtoncountyinsider.com Wellesley resident Peter Covo joins Conn Kavanaugh as partner in firm’s real estate practice The Swellesley Report Private Advisor Group LLC Purchases 1425 Shares of Doubleline Commercial Real Estate ETF (NYSEARCA:DCMB) Defense World Increases in interest rates stress commercial real estate Richmond Times-Dispatch Amalgamated Bank Trims Stock Position in Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI) Defense World Egypt boasts real estate portfolio valued at $200bn, ready for international export - Dailynewsegypt Daily News Egypt STAR resource center Department of Taxation and Finance Kenosha CubeSmart storage facility sold to new owner Kenosha News The Properties High Interest Rates Can't Touch The Wall Street Journal Connecticut real estate law changed after MV Realty investigation Eyewitness News 3 Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI) Stock Position Reduced by Victory Capital Management Inc. Defense World China's real estate market sees surge in weekend consultations and trading, boosted by accommodative policy Global Times Real estate transfers: May 17, 2024 RiverheadLOCAL 10 most expensive homes sold in Cuyahoga Falls, May 6-12 cleveland.com News anchor sells luxury Scottsdale home he built for $6M The Business Journals Real Estate Newsletter Articles this Week: Housing Starts Increased to 1.360 million Annual Rate in April Calculated Risk China Says It Will Start Buying Apartments as Housing Slump Worsens The New York Times See all homes sold in Avon Lake, May 6 to May 12 cleveland.com Real Estate Mogul Grant Cardone Closes Largest All-Cash Multifamily Deal In South Florida This Year Yahoo Finance 10 most expensive homes sold in Portage County, May 6-12 cleveland.com Should I Buy a House Now or Wait Until 2025: Expert Forecast Norada Real Estate Investments Robert Willett may be targeting female Realtors in Northeast Ohio Akron Beacon Journal Mid-May Greenwich Real Estate Market Report Greenwich Sentinel Refined Real Estate: Unique Leschi home with lake views lists for $1,395,000 seattlerefined.com Why Renting Still Makes More Sense Than Buying in Major US Cities Business Insider London Real Estate Is About to Get the ‘Selling Sunset’ Treatment Hollywood Reporter What's real estate wellness? Fortune Billionaire Frank McCourt raises his hand to buy TikTok Business Insider The Michael Houck Real Estate Guide for May 19 Oil City News Dodge County Real Estate Transfers Fremont Tribune Naples, Florida number of homes for sale among highest in US Naples Daily News Ellison sues real estate broker Chad Banken over alleged schemes involving contracts for deed Star Tribune Busch relative settles squabble with Clayton investors over real estate trust St. Louis Post-Dispatch Home listings are on the rise in southern Colorado, while other indicators show a slowing real estate market Colorado Public Radio Southern fast-food chain Cook Out buys Tampa real estate The Business Journals Real Estate's Got Talent – Commercial Observer Commercial Observer MCB Real Estate Revives Long-Awaited Viva White Oak Mixed-Use Project Source of the Spring New Rules for North Texas Real Estate Agents Creates Uncertainty Dallas Observer Did Fort Worth’s real estate market really ‘bottom out’? | Fort Fort Worth Star-Telegram This Florida 'Skinny House' is only 10 feet wide. But it's selling for $619,000 WKMG News 6 & ClickOrlando |
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