We as real estate agents play a crucial role in determining the value of a property. While you can get an independent appraisal, check your Zestimate, or go off of your tax assessed value, it’s clear to us that the person who can provide the most accurate valuation of a property is a local/experienced Queens Realtor. Our expertise and experience in the industry enables us to provide accurate and precise evaluations for local homeowners. In this article, we’ll discuss how we (Queens Home Team) determine the value of a home and what factors we take into consideration.
Understanding the Market Value
Market value is the price at which a property would sell in the open market under normal conditions. It is the price that a buyer is willing to pay and a seller is willing to accept for a property. We as local real estate agents use various methods to determine the market value of a property, including the comparative market analysis (AKA CMA) for residential 1-3 family homes and the income approach for multi family 4+ unit properties.
The Comparative Market Analysis (CMA)
The comparative market analysis is a process where real estate agents compare the property to be valued to similar properties in the same neighborhood that have recently sold. This allows us to see how the prices of similar properties have been impacted by various factors such as location, size, age, and condition of the property. We also take into account any improvements or upgrades that have been made to the property, and we also take into account things like recent pending sales (to see where the market is trending), available inventory (to see what the competition looks like at the moment), and month’s supply (to see if the market is favoring buyers, sellers, or balanced). Once we combine all of these factors, and couple it with our experience in the area, we are able to come up with a realistic valuation for the property.
The Income Approach
The income approach is used when the property being evaluated is an investment property. For these properties we consider the rental income that the property generates (or can generate) and any expenses related to the property, such as taxes, utilities, maintenance, insurance, etc. We then calculate the net operating income (NOI) and factor in the desired cap rate (i.e. Return on Investment) in the area which is what is ultimately used to determine the value of the property.
Other Factors to Consider
There are other factors that we as local Queens real estate agents take into consideration when determining the value of a property. These include external obsolescence, functional obsolescence, recent trends in the area, open violations, open liens, selling with or without tenants, layout of the property/units, new developments in the area, zoning & land use, development potential, the condition of the property, size of the property, and much more.
In conclusion, here at QHT we use a combination of methods to determine the value of a property. We use comparable sales which have closed in the last 6 months as our starting point and basis for the market analysis, but the secret sauce is when we factor in our expertise and experience, because that is how we’re able to provide accurate and precise evaluations of a property. We’ve sold over 500 properties so as you can imagine, we’ve seen a lot of properties hit the market, get offers, and eventually sell. We’ve been right, and we’ve been wrong. Every sale is a learning lesson and the combination of all these listings and sales is what gives us the knowledge to provide a very honest, realistic, and accurate home valuation.
If you have any questions or would like to receive a free home valuation, feel free to Contact Us anytime 🙂