Do you know what your house is worth?
Would you concede that there’s a chance that your estimate of its value might be higher than what a buyer would pay?
Contact the appraisers at www.scappraisals.com for your value questions.
A new statistical study, published in the Journal of Housing Economics, found that home owners on average “overestimate the value of their properties by about 8 percent.”
Tapping into federal databases, researchers concluded that overvaluations are likely tied to erroneous owner estimations of the capital gains they’ve accumulated in the house.
The study is in sync with a monthly survey conducted by Quicken Loans, which compares estimates provided by applicants for refinancings with results from appraisers. The latest Quicken study found a “widening gap” on average across the country between what owners think their homes are worth and actual market value. The divergence was much narrower in the Quicken survey compared with the Journal of Housing Economics findings —currently just seven-tenths of 1 percent — though in 2008 it averaged around 7.5 percent.
Nobody can blame owners for thinking optimistically about their homes’ value, right? It’s human nature. But here’s a question I recently put to real estate appraisers in different parts of the country: Other than the obvious emotional attachments that color our perceptions of our homes, where do we tend to err when it comes to estimating value?
Top of the list: Unrealistic expectations about how much the improvements you’ve made to the house will add to its resale value.
Bottom line: Without access to key data — recent sales comparables, accurate information on appreciation rates over time — it’s tough to know exactly what your house is worth. If you really want to know, consider hiring an appraiser to perform an independent valuation — they work for owners, not just lenders — or talk to multiple realty agents who specialize in your neighborhood
disclaimer: for information and entertainment purposes only