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Riverland's Real Estate Notebook
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Riverland's Real Estate Notebook |
JADs-Notebook is brought to you by John A. Dolloff REALTOR® / Sales Associate of Coldwell Banker Riverland Realty 11824 N. Williams St. US Hwy 41 Dunnellon, FL 34432 Wilbur Vanwyck, Broker. 800-927-4837 352-489-4511 352-489-9976 fax, Email: RiverlandRealty@Bellsouth.net
March 2007
Real Estate Q & A …
YOUR HOME AS AN INVESTMENT
Your house may have emotional, aesthetic, and historical value, but it has financial value as well. Some people even buy houses as investments, fix them up, and sell them at a profit. Since a lot of your money is probably invested in your house, it is important to keep an eye on its value.
Q. What is the value of your house?
A. That depends on whether you’re talking to the seller, the appraiser or the tax collector.
Market value is the price you pay when you buy a house – it’s what the market will bear. A house built in a certain style, or in a prestigious neighborhood, will often command a higher price. And a house in a booming area may sell for tens of thousands of dollars more that essentially the same house in a depressed or undesirable location. A real estate agent trying to determine the market value of a home will usually conduct a Comparable Market Analysis using up to date information obtained through their Multiple Listing Service. Thus the real estate agent should be able to accurately gauge the current market value of a home.
Appraised value (sometimes called fair market value) is what a real estate appraiser says your house is worth. The appraisal is based on the selling prices of similar houses in the area, as well as subjective judgment. So two appraisers may value the same house differently. Appraised value doesn’t dictate the market value. Because many appraisers gather information on recent sales from public records appraised values may sometimes be 3 – 6 months behind the actual market value of the home.
Assessed value is assigned by the local tax assessor and is the basis for your real estate taxes. There can be a large difference between assessed and appraised value, depending on how recently the assessment was done and the standards used in your community. Often a house is reassessed when it is sold or remodeled. If you consider the assessment too high, you can appeal it. Be prepared to show the assessment of comparable houses and to point out shortcomings the assessor might have overlooked that reduce its value.
Q. What is equity?
A. When you make a down payment on a house, the amount of the payment determines your equity. The more you put down the greater your equity. As you pay off the principle on your mortgage, your equity in the house increases. When your mortgage is fully paid, your equity is 100%. The house is yours free and clear, and you get the deed (or legal title) to it.
Equity can change. The value of a house changes continually – and so does your equity for as long as you have a mortgage. If you purchased your house for $200,000.00 and you put $100,000.00 down and have a $100,000.00 mortgage, your equity is 50%. If your house later is appraised at $250,000.00, your equity increases to $150,000.00 or 60%. And if your house is reappraised to $150,000.00, your equity will decrease to $50,000.00 or 33%.
Q. Does it pay to make improvements?
A. Improvements can be a real estate asset when you want to sell. Modern kitchens and bathrooms usually pay for themselves by increasing the market value of your house. So does a fireplace. But you may have a harder time getting back the cost of a swimming pool, sauna, or converted garage. And if improvements make your house overpriced for the neighborhood, it may be hard to sell. Local governments, home owner associations and condo and co-op associations often have strict rules about additions and renovations. There may be a fee, based on the estimated cost of improvements. And you’ll have to get approvals and permits, schedule inspections for electrical and plumbing work, and get a certificate of occupancy.
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11824 N. Williams St. US HWY 41 DUNNELLON, FL 34432 800-927-4837 352-489-4511 |
Coldwell Banker Riverland Realty is owned and operated by: Broker Wilbur Vanwyck; 800-927-4837. The views and opinions expressed here at JADs-Notebook are not necessarily the views and opinions of Coldwell Banker Riverland Realty. All information, articles, and commentary are for general public information, of expressed personal opinion, or for entertainment purposes, and are in no way to be construed as legal advice. Should you be in need of legal guidance concerning a Real Estate transaction please consult an attorney.  |
