Buying and owning a home is one of the largest financial commitments you can make. As such, it is critical that you learn to calculate appraised real estate values. With an accurate home appraisal, you can make an informed decision about whether to buy, sell or rent out real estate. To calculate a home’s appraised value, you will first identify comparable real estate. From there, you can apply comparable home values to your target property.
Define the home’s location according to city, neighborhood and ZIP code. In urban areas, you will research prices for comparable homes that are located within one square mile of each other. In rural communities, you may need to research property values for an entire county.
Classify the target home according to type, size, and layout. Perhaps you would classify the property as a two-bedroom condominium with 2,200 total square feet of space.
Identify specific features that add value to the property. Home features may include hardwood floors, stainless-steel appliances, walnut cabinets and exposed brick. With a detailed list of features, you are better able to research prices on comparable homes.
Read through your local newspaper and perform online searches for comparable real estate. Zillow and Redfin both operate easy-to-navigate websites for real estate searches. Apply prices on comparable homes to the appraised value of the target property. For accuracy, research sales and offer prices that have been posted over the past month.
Calculate the price per square foot of comparable real estate to estimate appraised values, if applicable. For example, your next-door neighbor lives in a condominium unit that is similar to your own property, but with a smaller floor plan. Your neighbor may have recently closed a deal to sell his 2,500-square-foot condominium for $250,000, or $100 per square foot. You may then consider setting an appraised value of $300,000 for your own 3,000-square-foot condominium.
Hire a professional appraiser before making a decision to buy or sell real estate. The appraiser has a trained eye to evaluate the condition of your home’s features in conjunction with property value trends within your immediate neighborhood. When you take out a mortgage, the bank may include appraisal services and fees as part of your closing costs.
Appraised values for homes often mirror crime rates within certain areas. High property value appraisals are associated with safe communities. As part of your appraisal calculations, consider ordering a police report from local law enforcement officials.