AVM’s, Zillow and Zestimates and More
Zillow has made their "Zestimate"  synonymous with home value. Often home owners use this figure as a guide to whether their home has increased or decreased in value or simply as a tool for prospective buyers. Zillow's Zestimate is what appraisers call an AVM Automated valuation model. These are essentially models that can provide real estate property valuations using mathematical modelling combined with a database. Several AVMs calculate a property's value at a specific point in time by analyzing values of comparable properties. Accuracy can vary. Read more about Zillow's approach. So why have an appraisal if an AVM can do it all? Depending on where you are living, you may laugh at the value given by an AVM or completely agree with the value given. It widely ranges due to the limited data certain regions are able to feed those models. That argument is tenuous as an appraiser's value can also vary depending on the appraiser completing the assignment. So why do we need appraisers? There is a great deal of statistical significance in AVM's so they are not to simply just be discarded. Appraisers may even approach value by similar means. Whether it be by regression analysis, match-paired, comp selection, the process can be very similar. Appraisers however speak more towards the qualitative value of a home. Condition and quality tend to be an oversight to AVM's. As appraisers visit the home and comparables, he or she can attest to the quality and condition and affirm whether certain adjustments are merited. Many times, AVM data is valuating on incorrect data or outdated information. That is why banks, lenders and others require an appraiser for the job. No one is accountable for the figure given in an AVM and that is a comforting reason to hire an appraiser. Appraisers are highly qualified professionals that go beyond an AVM. In today's… Continue Reading
Costs of In-ground pools
An in-ground pool can cost $20,000 - $50,000. It may even cost more depending on quality and how ornate a home owner gets. Pool houses are large costs as well. So what are they worth on an appraisal? If you own an in-ground pool, it may be hard to hear but an in-ground pool is worth what a typical buyer is willing to pay for one. Some buyers do not want a pool and may even consider filling it in upon purchase. Some buyers would love to have one for their family. Because these have mixed feelings, appraisers tend to see how in-ground pools react in your market. Are homes with in-ground pools selling for more? for less? the same? Are these pools larger, smaller? Can that size be found? Many of these questions are considered when developing an adjustment value. Depending on your locale, adjustments will vary but rarely will they equate to what it cost to install an in-ground pool. In summary, the cost does not equal the market value. The value of a feature can be extracted by similar sales in the neighborhood. Asking local realtors how homes with pools in your area do may give you a sense of value.
Equity, PMIs and LTVs
First lets define the word "equity" which is really just the shorten form of "home equity". Home equity is essentially the amount of ownership that is in a property. Basically its what the property is worth in the current market value minus the mortgage value. Its virtually rare to get 100% financing, but for this example lets say you purchased a home for $200,000 and took out a mortgage for $200,000, your home equity would effectively be $0.00 or 0%. This is why its imperative to get a great deal on a home. Any property bought below current market value is instant equity. There are many things to consider. Its clear that as you pay down your mortgage, your home equity will increase. This inverse relationship would be simple enough but you are also impacted by the market. This could go both ways and the market is affected by several factors. Whatever the reason may be, the market is never stagnant. That being said, your property value and or home equity are never stagnant. It may change nominally over the years or may not. LTV or Loan to value is an acronym you want to be familiar with. If you are looking to have PMI (private mortgage insurance) removed, the banks traditionally want to see a LTV lower than 80% or so (see your lender for details). This is a less risky loan for the lender to hold which would be the considering factor to remove the PMI. So if you bought that home for $200,000 and borrowed $200,000, mathematically, this ration would have to be less than 80%. either your home appreciates to be worth more than $250,000 and you still owe $200,000 (200,000/250,000 = 80%) or your house is worth $200,000 but the note is paid down to… Continue Reading
Cover Those Shoes or Boots Before Entering
Home can be both near dilapidated or a thing of modern beauty. This speaks to the several industries of service people that enter another person's home. No one that enters your home should disrespect you by leaving their shoes or boots on. This doesn't pertain to vacant homes on the verge of falling down, but this is speaking to the homeowner who is refinancing or getting a home equity loan and require an appraisal. Pilgrim Colonial appraisers will almost always wear shoe covers. Especially during the winter time its important for us to ensure your home is the way we left it. In a day where service is seemly becoming more cursory, we take a moment to "take our shoes off" so-to-speak and value our time with you.
