When placing a home on the market for sale or applying for refinancing, it is essential for a homeowner to know the selling prices of recently sold homes in his area. This information will allow the homeowner to set a realistic selling price for his own property or, in the case of refinancing, know how much equity he has in his home, and therefore how much of a loan he can request for the refinance.
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Contact a real estate agent and ask for a market analysis. Agents will often provide a market analysis at no cost to the homeowner, as the task takes just a few minutes to complete. A market analysis provides information on homes that have recently sold in the area by gathering data from the local multiple listing service (MLS), which lists the sales price and any applicable seller concessions that may detract from the overall value of recently sold properties. A market analysis can be provided in person or e-mailed to the homeowner for review. Most market analysis reports also provide a homeowner with a snapshot of the current estimated market value of his property.
Back up the market analysis with an appraisal. A home appraisal can cost anywhere from £195 to £325 as of October 2010, depending on the size and location of the subject property. An appraisal is similar to a market analysis, but is a lender-required document for purchases or refinancing, as it holds additional data. An appraisal will consider more factors than a general market analysis and provide a homeowner with a actual market value for his property that she can literally take to the bank. Appraisals review not just sales data of other properties, but account for items such as upgrades to add to the value, or damage that would detract from it. Appraisals include a visit to the homeowner's property by the appraiser.
Contact a local escrow officer for additional sales data not listed in the MLS. Title companies employ escrow officers who are responsible for closing sales transactions as disinterested third parties. Ask a real estate agent or appraiser for a recommendation. Escrow officers not only have access to data used in the MLS system, but can also acquire sales price data on newly constructed homes and provide a report with their sales prices. Combining the data an escrow officer is privy to with the information gleaned from a market analysis or appraisal provides owners with complete data on how much a property is worth.
Tips and warnings
- Data gathered on recently sold homes is only valid for six months.
- While it can be easy to use online listings services to look up sold prices, most website listings are out of date and do not reflect what is currently in the MLS. There is no substitute for professional assistance.
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