Pricing a home has never been all that easy unless the home is in a development where the homes were all built at the same time and several have sold in the last year.
St. Paul isn't like that at all. We have every style of home and the ages of the homes range from homes that were built in the 1860's to homes that were completed last week.
The location of a home within the city makes a difference as does what is next door to it, across the street or around the corner.
The best practice for determining value is to find three homes that have sold in the last year that are comparable to the home being priced and are located close by.
There are not always comparable homes located in the immediate area that have sold in the last year. I live in the Small upper town neighborhood and there are few home sales here. Often appraisers call and ask me questions as they try to determine the value of a home.
My point in this is that none of this is really a science, at least not with the type of housing I sell. It gets a little easier with the downtown lofts because in the bigger buildings I can find those identical units that have sold in the last year.
No one has invented a computer program yet that will determine the value of a home. I use a computer and data to determine value but I also use experience and a kind of fuzzy logic. The Real estate web sites that offer home valuations are there to connect realtors and sellers, realtors pay for the leads. Other sites use tax data.
Once a home is on the market we still have to look at the value every couple of months. The value of a home is still the amount of money someone will pay for it. Buyers need the same kind of price analysis to determine how much they should pay for a home.
There are some things that do not affect the value of a home, what the owner paid for it comes to mind as one of the things that buyers are concerned about and sometimes sellers too. Previous sale price has nothing to do with current value and it never has. No one has figured out the relationship between the Ramsey county tax assessors assessed value of a home and the actual value either so I wouldn't recommend relying on tax records to determine value or make a big deal out of a home being priced above or below the assessed value.
They are not worth less because they are in foreclosure either.
Related: Search to find homes that have been sold in the last two years and see how much they sold for.
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You’ve put your finger on the value of a ‘professional’ real estate broker. In my mind, a professional, whether doctor, lawyer, or broker, applies theoretical/technical knowledge with actual experience to produce professional judgment. After many years of law practice, I find I react to certain legal questions with an “instinctive” answer long before I can articulate the technical reasons for it. You are doing the same thing with ‘fuzzy logic.’
This is why I seek out the judgment of brokers in real estate transactions.
A couple of good points regarding value. As an investor myself I’ve often found it very frustrating when a buyer gets all worked up when they find out I bought the property for X dollars and am now selling for X + dollars. Imagine, I bought a property and am making a profit; some buyers really don’t like this idea regardless of the value they are receiving. I also like your point regarding tax values. I’ve had so many buyers over the years who think they know how to value a property because they can use the power of the internet to find the tax value of a house. Those of us in the business know there is often NO correlation between those tax values and market value. Sales prices in this market are frequently 50% of tax value.
I admit as an agent, it’s sometimes tough to determine the value of a home–especially now that prices have come down and foreclosures are about 50% of the sales in this state. But it’s also true that “everything in real estate is negotiable” and I think buyers and sellers have to realize that the market value really is “What a willing and able buyer is going to pay for your home” Tax assessments, previous sales, even appraisals can’t put an accurate amount on the home, until someone is willing to write the check.
I admit as an agent, it’s sometimes tough to determine the value of a home–especially now that prices have come down and foreclosures are about 50% of the sales in this state. But it’s also true that “everything in real estate is negotiable” and I think buyers and sellers have to realize that the market value really is “What a willing and able buyer is going to pay for your home” Tax assessments, previous sales, even appraisals can’t put an accurate amount on the home, until someone is willing to write the check.
Here people check the price per square meter first. It’s very easy to find out how the average price per square meter is in an area and people rely on it to examine which estate they’re going to visit. They valuate the property and compare it to the price they’re willing to pay for it depending on the condition of the estate.
Most buyers I’ve met know what they want and checked the square meter price before contacting a broker. It seems they don’t have much faith in them.