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Home Price Appreciation - Q &
A
| Q: |
What is the
difference between market value and appraised value? |
| A: |
Appraised
value is a certified appraiser's opinion of the worth of a home at a
given point in time. Lenders require appraisals as part of the loan
application process; fees range from $200 to $300.
Market value is what price the house will bring at a given point in
time. A comparative market analysis is an informal estimate of market
value, based on sales of comparable properties, performed by a real
estate agent or broker.
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| Q: |
How do you
increase the value of your property? |
| A: |
The
biggest factor outside of a homeowner?s control is market conditions.
But other issues -- including the condition of the property, specific
home improvements and neighborhood stability and safety -- can influence
property values.
The greatest rise in home prices occurs when the economy is strong
and the number of home sales is increasing.
Though markets vary, that has occurred twice in recent history -- in
the early 1970s and the late 1980s. However, single-family homes
appreciated much more than condominiums. While overall market conditions
are out of the homeowner's control, other factors are not.
For example, specific home improvements can increase the value above
the cost of the improvements. According to Remodeling magazine, which
publishes an annual "Cost vs. Value" remodeling report, a
remodeled bathroom returns 81percent to the owner, a bathroom addition,
89 percent and a master bedroom suite, 82 percent.
Remember, quality pays. Well-planned and well-executed remodeling
jobs are a good investment while bad work seldom enhances value or
livability.
If you live in a high-crime area, an organized community watch
program not only will lower the crime rate but also have been known to
enhance property values.
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| Q: |
What are the
standard ways of finding out what a house is valued at? |
| A: |
A
comparative market analysis and an appraisal are the standard ways
consumers, lenders and realty agents deterimined what a home is worth.
Your real estate agent will be happy to provide a comparative market
analysis, an informal estimate of value based on comparable sales in the
neighborhood. You also can research "the comps" yourself by
checking on recent sales in public records. Be sure that you are
researching properties that are similar in size, construction and
location.
This information is not only available at your local recorder's or
assessor's office but also through private companies and on the
Internet.
An appraisal, which generally cost $200 to $300 to perform, is a
certified appraiser's opinion of the value of a home at any given time.
Appraisers review numerous factors including recent comparable sales,
location, square footage and construction quality.
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| Q: |
How can I
improve the value of my property? |
| A: |
The
biggest factor outside of a homeowner?s control is market conditions.
But other issues -- including the condition of the property, specific
home improvements and neighborhood stability and safety -- can influence
property values.
The greatest rise in home prices occurs when the economy is strong
and the number of home sales is increasing. Though markets vary, that
has occurred twice in recent history -- in the early 1970s and the late
1980s.
Specific home improvements can increase the value above the cost of
the improvements. According to Remodeling magazine, which publishes an
annual "Cost vs. Value" remodeling report, a remodeled
bathroom returns 81percent to the owner, a bathroom addition, 89 percent
and a master bedroom suite, 82 percent. Remember, quality pays.
Well-planned and well-executed remodeling jobs are a good investment
while bad work seldom enhances value or livability.
The safety and security of a neighborhood can affect property values,
too. If you live in a high-crime area, an organized community watch
program not only will lower the crime rate but give home values a boost,
too.
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| Q: |
Should I add
on or buy a bigger home? |
| A: |
Consider
these questions before making a choice between adding on to an existing
home or moving up in the market to a bigger house:
* How much money is available, either from cash reserves or through a
home improvement loan, to remodel the current house?
* How much additional space is required? Would the foundation support a
second floor or does the lot have room to expand on the ground level?
* What do local zoning and building ordinances permit?
* How much equity already exists in the property?
* Are there affordable properties for sale that would satisfy housing
needs?
Ultimately, the decision should be based on individual needs, the
extent of work involved and what will add the most value.
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| Q: |
What kind of
return is there on remodeling jobs? |
| A: |
Remodeling
magazine produces an annual "Cost vs. Value Report'' that answers
just that question. The most important point to remember is that
remodeling a home not only improves its livability for you but its curb
appeal with a potential buyer down the road.
Most recently, the highest remodeling paybacks have come from
updating kitchens and baths, home-office additions and extra amenities
in older homes. While home offices are a relatively new remodeling
trend, for example, you could expect to recoup 58 percent of the cost of
adding a home office, according to the survey.
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| Q: |
Where do I
get information on housing market stats? |
| A: |
A
real estate agent is a good source for finding out the status of the
local housing market. So is your statewide association of Realtors, most
of which are continuously compiling such statistics from local real
estate boards.
For overall housing statistics, U.S. Housing Markets regularly
publishes quarterly reports on home building and home buying. Your local
builders association probably gets this report. If not, the housing
research firm is located in Canton, Mich.; call (800) 755-6269 for
information; the firm also maintains an Internet site. Finally, check
with the U.S. Bureau of the Census in Washington, D.C.; (301) 495-4700.
The census bureau also maintains a site on the Internet. The Chicago
Title company also has published a pamphlet, "Who's Buying Homes in
America." Write Chicago Title and Trust Family of Title Insurers,
171 North Clark St., Chicago, IL 60601-3294.
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Copyright 1999 Inman News Features
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