Estimate the Value of Real Estate

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Your real estate investment value reveals your leveraging power, tax responsibilities, insurance costs and the value of your investments. A real estate mailer may give you an idea about property values in the area, but for an accurate estimate of your property’s value, consider getting an appraisal or using the market data approach, after repair value, income capitalization or cost approach.

Appraisal

An appraisal is done by a licensed real estate appraiser and may cost up to $500, but it provides an accurate estimate of your property’s value.

Market Data Approach

The market data approach is used for land and single-family homes. Using this approach, a real estate professional compares 3-4 similar properties to determine the property value. For example, these properties will have similar neighborhoods, ages and sizes.

After Repair Value

If you have or plan to do repairs on your home, the after repair value estimator may determine your home’s value. Those who purchase homes to flip typically use this option.

Income Capitalization

Commercial properties use the income capitalization approach because it compares the property’s net income and required ROI. It is based on future income and expenses, so it is more accurate. This model reveals whether your real estate portfolio is performing to your desired ROI.

Cost Approach

Special-use property is difficult to estimate based on comparable properties. Therefore, its value is estimated based on the land value and the cost of constructing the buildings. Adjustments may be made for new technology or building costs. The land is estimated based on similar properties. Building depreciation is deducted from the value.

If you want to know your property or investment portfolio value, consider getting your properties appraised or use the market data, after repair value or income capitalization models. If your property is not easily comparable, consider using the cost approach.

 

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