Finding the value of home is not as hard as it seems

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November 10, 1991|By ELLEN JAMES MARTIN

All over the land, homeowners are scratching their heads. People who once felt confident they could track the value of their homes are starting to wonder.

"The head-scratching is really questioning: 'Should I hold tight, refinance or step up?' " says Dorcas Helfant, the National Association of Realtors president-elect. Many homeowners are stymied in the planning process because they can't pin a dollar figure on their homes.

In truth, judging the value of your home is not as tricky as it seems -- even in an era of turbulent real estate values.

Whether you rely on real estate agents or a professional fee appraiser, you should get a definite resolution to the question of your home's value in a week or two.

"Call three different real estate agents active in your marketplace and ask them to tell you the truth. Tell them you want the facts -- down and dirty -- and that if the house is a bomb, you want to know why," Ms. Helfant advises.

In the past, many agents tended to "soft sell" homeowners seeking to know the market value of their homes, Ms. Helfant notes. "After all, your home is your castle and the agent is going to be very reluctant to tell you if the news is bad or if they might think it's personally insulting to you."

Indeed, some agents consistently claim the value of a home is higher than what they believe it could reasonably bring in the market. That practice is called "buying a listing." But it's not in the seller's interest to be flattered into setting a price that's unrealistically high, Ms. Helfant says.

"Knowledgeable sellers want to make sound decisions on price," Ms. Helfant says.

If you put your home on the market at an artificially high price, you'll waste energy and money in what will, almost inevitably, turn into a wheel-spinning activity, says Albert B. Eason, president of the National Association of Independent Fee Appraisers.

"If you overprice the house, there will be many dollars wasted on advertising as well as a loss of time," he says.

To get a realistic view on the value of your home, real estate specialists offer these pointers:

* Ask for price opinions from at least three real estate agents active in your neighborhood.

"Agents will give you a lot of information -- especially if they think you'll be wanting to sell," says Matthew J. Smith, president of Kern Realty & Appraising in Towson.

Even so, don't feel obligated to promise that you will sell now or will sell through a particular agent. You needn't be embarrassed to ask for free help even if your housing plans are uncertain.

A farsighted agent will be interested in establishing a long-term relationship with you.

Be sure you select agents who know your community. These are the ones whose names are on the "For Sale" signs visible in the neighborhood. Don't make the mistake of selecting a relative who sells real estate in another community or anyone else unfamiliar with your market.

* Don't automatically reject one price opinion because it's out of line with the others. Instead, ask for backup data.

Suppose that Agent A suggests that your home is worth 10 percent more than Agent B or Agent C. The temptation is to think that Agent A is trying to "buy the listing" by offering you a flattering price opinion. That's possible, but it's also possible that Agent A's opinion can be justified by the facts.

To determine the validity of Agent A's opinion, ask to see the comparables he used. Comparables should be very similar homes that sold recently in your nearby market. Study the agent's comparables to be sure that they are similar properties or that price adjustments have been made to reflect major differences.

It's folly, for instance, to compare a three-bedroom home to one with four bedrooms. It's also folly to compare one that has a garage or family room with another that doesn't. And an older home with the original kitchen shouldn't be compared with one that has new kitchen cabinets, counter tops and appliances.

* Order a formal appraisal if the opinions of realty agents leave you stumped or if your home is unusual.

"Sometimes even the best real estate agents aren't quite sure how to price a property," says Mr. Smith, the Towson appraiser.

Suppose, for instance, that you have a one-of-the-kind contemporary or an expensive Tudor mini-mansion on several acres of land. The agents you consult may have searched all over for comparables and gotten nowhere. So maybe it's worth it to you to spend the $150 to $350 for a professional appraiser.

A good appraiser will have more training in the art of property valuation than a typical realty agent. Still, realty agents can offer good leads to help you select an appraiser with background and expertise. Ask several agents for recommendations and listen for names repeated more than once.

Remember, property appraisal is an art, not a science. There is no absolute "right answer" to the value of a home -- except what actual buyers are willing to pay for the place at any given moment.

Still, you can assume that an appraiser will give you a relatively neutral view of your home's worth, says Mr. Eason of the National Association of Independent Fee Appraisers. "The appraiser is the only non-advocate in this process."

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