Condition of home
The # 1 consideration determining property value is the condition of the property. Naturally a recently updated home is going to demand a higher price than a property with thirty years of deferred maintenance. When buyers are shopping for a new home, if they have a choice between two homes that are in a great neighborhood, one on a huge lot that needs repairs while the other is in great shape but sits on half the size lot, which do they choose? The prices of the homes are similar and in most cases the house that needs repairs (depending on price) can be a better investment. The reason is a house is a depreciating asset and the lot will retain its value (or likely appreciate). If both homes were removed, the larger lot would likely sell for more. A less attractive home can always be updated, but the lot can’t be changed. Having a larger lot with the ability to create a semi-passive income could be a benefit.
Location and neighborhood
Homes in areas that have little room for expansion tend to be more valuable than cities that have plenty of room. The accessibility, appearance, and amenities of a neighborhood can add to the desirability. In contrast, a lot’s proximity to busy highways or commercial buildings may make it less desirable for resale. Homes that are situated near major transit routes make commuting (a big part of people’s day) easier versus a home that is tucked away and can only be accessed by one route. The appearance of a neighborhood with trees, nice landscaping and nearby parks or open space is always near the top of the homebuyer’s list. Most people like to frequent places that are convenient; grocery stores, coffee shops, general shopping and restaurants are a plus. And, the all-important schools, the quality and distance from the house are an important factor for most homebuyers.
Recent sold prices of comparable property
When selling, access to good comparable property information provided by an experienced real estate professional is key to determining the current market value of your loved one’s home. Having accurate information is what you need to price the home competitively.
Properties used for a comparable analysis should be within 10 – 15% of the square footage of the subject property and should have been listed and sold within the last 6 months. Similar numbers of bedrooms and bathrooms, garage space and yards are also a consideration. If possible, the comparable properties should come from the same neighborhood.
What doesn’t apply
The assessed value on real property tax bills generally do not reflect the true value and should never be used to determine the current property value in the marketplace. Valuation is not necessarily equal to cost or price. A home with a $40,000 pool will add some value, but when appraised, typically does not equate to the full amount of the amenity. While cost and price can affect value, they do not determine value. That means the $40,000 pool might be worth $20,000 in an appraisal.
Private appraisal
Some people think that a private appraisal by a licensed real estate appraiser is good evidence of the value of the estate property, but it can be expensive. As an experienced real estate broker, I can provide a fairly accurate comparative market analysis. Keep in mind, if a formal probate proceeding is required, spending money on a private appraisal is not necessary, nor do I recommend it. A court-appointed referee will perform the appraisal, so the fee for a private appraisal would be wasted. The probate referee will charge a fee for this service. If a formal probate proceeding is required, the real property will be appraised by a probate referee at a cost of one-tenth of one percent of the probate referee’s appraised property value.
Probate referee appraisal
The appraisal determines the property value for tax purposes so that the gain or loss on sale can be calculated. It sets a property value in the event the property has to be divided among multiple beneficiaries. It also establishes a basis to calculate the statutory fees for the executor or administrator and probate attorney.
90% rule
When the estate representative is selling a property involved in probate, the sales price may not be less than 90 percent of the probate referee appraised property value. The property is appraised typically as of the date of death and the appraisal by the probate referee must be within one year of the sale date. If it has been a year or close to a year from the date of death, the best step is to contact the probate attorney for guidance. As we’ve all experienced, the market can change in a year, and the court may order a reappraisal to make certain the property is being sold at fair market value.
