Don’t Trust Your Realtor: Common Valuation Mistakes

FINE… I don’t really suggest to not trust your Realtor or other consultants, unless they give you really bad advice, like the three mistakes defined in this article. A large number of Realtors learn how to value real estate and is a great asset (especially the ones that give attention to real estate investors), but the unfortunate simple truth is that many investors and agents make these common mistakes: ts use websites to promote the deal of properties, often work at nights and saturdays and sundays busy in showing properties to buyers.

? Add more value to a house for a bedroom

? Wrongly adjusting for square video

? Compare non similar style homes with no realignment

Add value to a property for a bedroom

This is by considerably the most frequent error that We see. In some instances a bedroom will add value but normally you can count on it. If a house recieve more bedrooms it is likely bigger and the large home is more valuable, but the bedroom itself is not adding the value, the square footage is. In the event two houses are the same size and one has an additional bedroom it is lacking something else OR has much smaller rooms, that will stop some buyers. It can be quite simply a wash for value purposes. The one different to this is if the house would not adapt to the neighborhood. Pertaining to example, if the complete community is 2 or 3 bedrooms and you have an one bedroom, it actually should add value to add a bedroom, although you may are keeping the house the same size. We would be very careful in these uncommon cases because it is hard to find out how much value a bedroom will actually add. So when you are looking at your comps, look at the size and not the amount of bedrooms.

This will not hold true for bathrooms. Bathrooms will almost always add value.

Wrongly modify for square video footage

A less common, but more devastating error that I see is to use a price every square foot model to value a home. A large number of agents make this blunder. The error is to use an average price per square foot and multiply that number by the size of your house you are trying to value. Not necessarily wise to use this method, particularly if your house is on the tiny or large size for the. Think about it. Is a 2, 000 square foot house well worth twice as much as the 1, 000 sq foot house that might be next door? The area brings a certain range of values that all houses fall in and the lot ideals should be near the same whatever size house is into it. Using a price per sq foot model does not are the cause of the lot.

It is true that you need to modify for size, because larger homes carry more value, but it is straightforward to mess the realignment up. The best way to try this is to dig into the comps and get a thought for the required adjustment. This is very tricky because the value per sq . foot decreases as the homes get larger. That is a safe gamble to prevent buy the major or smallest house in an area, but since you do, use a very conservative adjustment for size. One rule of thumb that I like to 2 1/3rd of the average price every square foot as the size adjustment. This is pretty near average, so it is nice; but again is a general guideline and is not science.

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