Market Value Is Stupid?-I Don’t Think So! - Posted by Linda Simms
Posted by Linda Simms on August 25, 2003 at 15:09:16:
Nothing in this world is certain. The objective usually is to determine with as much rationality as possible what the place is worth or will sell for today. That is why it is called “Market” value. The only real indicator of this that I know, is what comparable or like properties in the same area have sold for in the recent past. What is reasonable? A good indicator seems to me to be what have comparable properties sold for in the last six months Realtors can give you these comparables or comps from their MLS listings. The MLS will not, unless you are a relator, surveyor, appraiser ect. give you access. Although not owned by relator/ brokers, it is their little private source. The wisdom of not opening it up to investors on a fee basis escapes me and seems stupid! Do not take listings of properties still for sale. Realtors are a part of the problem of ever rising property prices as they would like to list the property as high as reasonably possible, as it means more money to them, and those listings may or may not be in part or in all truly reflective of the current market.
Other sources are tax roles showing last sales and some places they also show comparable sales. There are also commercial services who will do the same thing. Once you have the so called true comparables, it is up to you to analyze them. You have to compare in size, number of bath and bedroom, lot size and any other amenities. Here you may take into account and adjust for price per square foot. You must also compare as to location, usually a one mile square area, but last and most important of all you have to look at the property and the area. One block can make a difference and it can be readily apparent if you look at it. Shape will also greatly affect it, which you determine by looking.
You may want to average several properties and use the average. In a fast rising (or declining market all of this may not be adequate but it is a place to start. In our “Golden State” where prices seem to fluctuate daily, it is even harder. As we said at the start nothing is certain and even all this may not allay your fears, but it is a rational way to go about it and to be as reasonably certain as possible and not leave everything to chance.