How Much $$ is My Property Worth?
There are many tools available to help modern consumers estimate property values.
But be warned; use them wrong and you could lose a chunk of cash.
Are County Assessments Accurate? Sometimes, not so much…
By far, the most common and potentially disastrous mistakes homeowners and shoppers make when trying to figure out a home’s value is to focus solely on a property’s assessed value as set by the county government.
With thousands upon thousands of parcels to value every year and a modest number of staff people, county tax assessors paint with a broad brush by necessity. In many cases, their estimates can be far above or below what a property may actually sell for if properly marketed for sale.
For example, the county calculates home values, in part, based on their size (per square foot). If a home is much larger than usual for its neighborhood, its assessed value may exceed the sale price it fetches. This happened with a transaction I was involved in, when a very large home (more than triple the average in the area) sold for $200,000 less than its county valuation.
Things become much more muddled when valuing land. Thanks to a large catalogue of tax exemptions for agriculture and the huge variations in everything from climate to soil quality here, spectacular discrepancies can exist between vacant land tax values and sales prices.
Could a 30-acre ranch near town with ocean views really be worth $7,500 dollars? If so, sign me up!
Until recently, the world of online real estate was a wild west filled with dozens of competing websites. But due in part to Zillow’s recent merger with Trulia, we’re nearing the day when there could be one site to rule them all.
But handy-dandy as Zillow’s “Zestimate” tool for home valuation may appear, it can be notoriously inaccurate when valuing property in Hawai‘i.
If you’re living in a fairly homogenous subdivision, with plenty of homes quite similar to each other in size, age and quality, then your Zestimate may not be too far off. But in cases of large acreage or homes in highly diverse neighborhoods (very prevalent in Hawai‘i), that valuation tool can be risky to use.
Case in point: I recently sold an oceanview home with a farm in Hamakua that Zillow “Zestimated” at close to $1 million. The county, by contrast, assessed the home at $141,000. The final sales price: just over $600,000.
Can a Realtor Really Help?
A carefully crafted opinion of value from a trusted, competent agent can be one of the most accurate and cost effective ways of determining a property’s worth. Most will do it for free, assuming there is the promise of a payday somewhere in the future.
If you’re contemplating a future sale or want to know the value of a property you might buy, many skilled agents will take the time to show you sales that are comparable to the property you’re purchasing. To assure you that they know their stuff, ask them to explain in detail what makes different properties they present to you higher or lower in value.
Good agents should be able to adjust in approximate dollar terms for differences in property size, quality and age (among other things).
If your desire to know a property’s value has nothing to do with a possible sale or purchase in the future, just be aware that most quality agents value their time more than anything else and are more likely to do their best work if there is a sale or purchase pending somewhere in your near future.
For most other purposes of home valuation, it’s probably worth shelling out a few dollars to an independent professional. See the section below for details.
Calling in the Pros
If you’re contemplating the sale of commercial property, large acreage or a truly unique piece of real estate (a luxury or historic home for instance), or if you need a home’s value for some official purpose, like an estate settlement, a real property appraiser’s exacting eye for detail may be what you need.
Before an appraiser can be licensed, they must study hundreds of hours of coursework, pass grueling hours-long test sessions and have accomplished thousands of hours of hands-on appraisal experience under the watchful eye of a licensed mentor.
You’ll pay for this service, of course. Residential appraisals can start at around $450 (on the low side, from appraisers we surveyed) and run well above $1,000, depending on a property’s complexity. Commercial appraisals, on the other hand, start at around $3,500 and go up from there as needed.
But when hundreds of thousands of dollars are on the line, that’s often money well spent.