Why Knowing The Value Of Your Home Is Important-And Why A Zillow Zestimate Is Not An Accurate Tool.
When you're considering selling your home in the 91423, 91411, or 91403 zip code you may be wondering "How much is my Sherman Oaks home worth?" Even if you are not or have not considered selling your home, knowing the value of your property is always a good idea, since property is likely one of the biggest investments you will ever make in your lifetime. If you’re using a Zillow Zestimate to get an accurate home valuation, you may get a skewed result, which could then affect your home’s listing price. While Zillow has historically provided relatively accurate estimates based on the year the home was built, the number of bedrooms, square footage, and other quantitative data, they’ve recently changed their algorithm. Even when Zillow was fairly accurate, it still provided only an estimate as opposed to a true valuation done by an appraiser or Comparative Market Analysis. Here’s how to get an accurate home valuation and why relying on Zillow or similar sites is usually a bad idea. When people are interested in selling their home, the request is usually "Sell my home fast in Sherman Oaks!"; "For the highest price!" In these cases, it's definitely a bad idea to rely on a website to determine the value of your home.
A home valuation is just a fancy way of saying how much your home is worth. Home valuation could be an Appraisal (form 1004, or otherwise), like the bank uses or could be a BPO (Broker Price Opinion) or a CMA (Comparable Market Analysis). Appraisals, in particular and sometimes Broker Price Opinions, are used during real estate transactions such as buy-sell or refinances to ensure homeowners or buyers are not overborrowing for a property. The home is used for collateral in a mortgage, and if the borrower defaults on his or her loan, the lender will sell the home to recoup the money lent to buy it. If the home was overvalued and they lent too much, they could lose money. The home valuation ensures they will be able to recoup costs should the mortgage not be paid in full.
A Zillow Zestimate is an automated home valuation tool and is recommended as a starting point when determining the value of your home. It incorporates user-submitted and public data and takes into account home facts, location, and market conditions. Zestimates are done entirely online, and no representative of Zillow will visit your home to perform an appraisal. Banks and lenders do not use Zillow or similar services to estimate property and instead rely on the expertise of a licensed appraiser. A Zestimate can be off by a very large percentage much of the time in some markets, which amounts to tens or even hundreds of thousands of dollars in inaccuracy. When you're thinking about the question, "How much is my Sherman Oaks Home Worth?" or "What are property values in 91423?", you definitely need to think about how different and unique each property is. They are not cookie-cutter tract homes, that's for sure!
The main difference between the two is that a Zillow Zestimate is simply an algorithm. You punch in data, and a value pops out. There is no actual human involved who views your home, compares it against others on the market, and produces a detailed report. When an agent conducts a valuation, they are actively involved in the process and create a valuation that is personalized and in-depth. You simply cannot rely on websites to accurately estimate your home's value. Your Sherman Oaks home value is influenced by recent sales activity, the home's current condition and quality of constructions, specific amenities, the competition it will face in attracting buyers, and the marketing strategy that will be used to build up and leverage current market demand.
The only way to answer the question "How Much is Home Worth in Sherman Oaks" is to have a licensed professional:
1) Evaluate the condition of your home.
2) Analyze its full potential against competition.
3) Create a custom marketing plan to attract buyers.
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A Comparative Market Analysis (CMA) is a tool used by real estate agents to value a home. It evaluates similar homes that have recently sold in the same area. Agents find comparable sales and use them to conduct a sales comparison. In most cases, an agent will find three homes that have recently sold and are as similar to and located as close to the home being valued as possible. Each one is then analyzed to pinpoint differences between it and the home being valued. Once these differences are priced out, the price of each comp is adjusted to see what it would cost if it was identical to the home being valued were it to be sold in the current market.
An appraisal is an unbiased valuation of a home based on a professional’s opinion. They are usually what mortgage companies use for home purchases and refinances. A lender usually orders a home appraisal and the cost of the appraisal, sometimes up to $500, is paid by the homeowner. An appraiser does a complete visual inspection of the interior and exterior of the home as well as taking into consideration recent sales of similar properties and market trends. The appraiser then compiles a detailed report on the home, including an exterior building sketch, a street map showing the home and any comparable sales, photos of the home and street, an explanation of how the square footage was calculated, and any other relevant information.
Lenders base the amount of their loans on the value of your property and usually allow you to borrow a maximum of 75% to 96.5% against your property. Knowing what your home is worth allows lenders to calculate your equity in the home. The more equity you have, the better terms you will receive on your refinance.
If you’re doing home improvement projects to increase the resale value, you want to make sure you’re not pricing it out of the market. If your home is already priced on the high-end for your neighborhood, making too many improvements could make it more difficult to sell. When you get a valuation, you can see how your home compares with others in the neighborhood and let this guide your home improvement decisions.
If you want to borrow cash against your home, getting a Home Equity Line of Credit (HELOC) could be a good option. To qualify, you must have a certain level of equity in your home. Most lenders require at least 20%. Getting a home valuation will help you determine if you qualify and will be used by the lender to make a decision on your loan.
Though it’s not a necessity, simply knowing the value of your home is good information to have. It will help you plan for the future and deal with unforeseen circumstances when you might be in a position that requires extra money or a quick relocation. Knowing how much equity you have in your home and how much you may be able to borrow against it or sell it for will help you respond to any financial curveballs that life throws at you.