Whether you’re looking to purchase your own home or an investment property, it is crucial to properly estimate a house’s value. This number is the starting point for all of your analysis and negotiations, so you need to get it right!
But what if you don’t have access to the MLS? If you are not working with a realtor, it can be hard to find the data you need in a quick, easy way. And analyzing the data you DO get can be a challenge. So how do you estimate house value without MLS access in Grand Rapids?
1. Understand the Neighborhood
Start by collecting data on houses in your target area. If you know you would like to buy in a certain neighborhood or part of town, drive around! See what is for sale, and then find the list price. Check what kinds of amenities it has, in addition to the square footage, bedrooms, and bathrooms.
If you’re able to find 10 or more houses for sale in a given area, you can start to get a feel for prices and features in that area. For instance, you might learn that $100,000 can get you a big house with a nice yard in one area, and a shoebox in another.
Many people skip this step. They feel that with the internet, they don’t have to visit in person until much later in the process. We find this is a missed opportunity! If you know a neighborhood well, you can find great deals when they pop up.
In addition, it is crucial to understand the ‘vibe’ of an area. Does the street feel safe? Is the park area well maintained, or run down? Are there houses with boarded up windows next to beautiful lots? These things are difficult to figure out from your desk chair.
Neighborhoods in Grand Rapids vary greatly, and the differences are hard to spot until you’re in the thick of things. Get out there, and reap the benefits.
2. Collect Hard Data
Once you understand the neighborhood on a general level, dig in. Search for recently sold houses in the area, and again, check their amenities. You will start to see patterns emerge.
You’ll notice that 3 bed / 2 bath homes around 1200 square feet tend to sell in the same price range. However, 2 bed / 2 bath homes sell in their own range, and 4 bed / 1 bath homes are different still.
You can then quantify these differences. An extra bedroom is worth X dollars, an extra bath is worth Y. If it has an attached 2 car garage, the price goes up by Z.
If you do enough digging, you will start to get an accurate range for homes, often within a few thousand dollars. At that point, you can start getting confident about what your house’s estimated value.
Remember, look at recently sold homes that are close to your target area. Otherwise, your numbers will get way off!
3. Compare to your property
Once you have this data in hand, start doing direct comparisons to the house you’re considering. Remember, you can mathematically quantify what a bedroom is worth in a given neighborhood!
Compare the recent sale prices, and use the data you have gathered. Make sure your comparison properties have similar square footage, bedrooms, bathrooms, and lot size. These four elements are enormously important in sale value.
4. Take repairs into account.
Be careful with home condition. Remember, certain repairs equal big dollars. Things like foundation, roof, siding, HVAC, and plumbing issues can take a huge chunk out of your wallet.
Once you’ve analyzed the likely value range for a property, look at it as a repairman would. Check out the condition of its major systems, and estimate what it would cost to fix those things up. You may need the help of an inspector or contractor for this work, but there are many great online tools available to give you a ballpark estimate.
If the house desperately needs a new roof, that will negatively affect the value. If it has foundation issues, it will require serious repair after purchase. So once you walk through the home, make sure to factor in necessary repairs.
Very few houses sell in perfect condition. However, you don’t want to get sucked into a money pit! Compare the condition of your target property to others that have sold. This will help you figure out if you need to offer less due to repairs.
Follow these steps, and you’ll be well on your way to estimating home value effectively. Make it happen!