Greetings valued readers!
In the world of residential investment real estate cash is king, from cash in-flow to cash out-flow to everyday decisions on repairs there is nothing that occupies the mind of a successful real estate investor more than money. That being said the single most important piece of financial data to an investor is how much their properties are worth. But unfortunately, in an ever changing market such as South Florida this can often be a very difficult question to answer. So today we are going to look at the various ways you can get a quick or detailed evaluation of your property’s true worth.
#1 The Appraisal
An appraisal is by far the most accurate evaluation of your property’s worth. A skilled appraiser understands the market as well as the specific details of your property as they will conduct a thorough inspection of each of the components in the property. They will check the paint, the electrical, the roof, the plumbing and just about everything that makes up a property. They will then check the comparative sales, listings and pending sales from a variety of sources that include sales which do not even register on the MLS! PRO TIP: Most Realtors would not be happy to tell you that the MLS does not contain all of the recent sales but it’s true. Now of course at Real Property Management Miami we are Realtors as well so why would we be telling you this? Because we are property managers first and we want our investors to know the truth.
But as is so often the case in life you get what you pay for with appraisals, or should we say you pay for what you get. Most appraisers will charge anywhere from $150 on the low end (less detailed almost like a CMA) to upwards of $500 for a top of the line appraisal. So if you are in a situation where you are going to buy a property you definitely want to pay for the appraisal but if you are just interested in estimating the value of your property to check on the market you can still get good information for less money with the CMA.
#2 The CMA (Comparative Market Analysis)
A CMA is as close as you can get to an appraisal without the hefty price tag. Basically a licensed Realtor (such as us) will gather information about your property and then use the MLS to compare it to other recent sales that have closed on the market. And a good CMA will also include both Pending Sales and Active Listings to get a gauge of the market as it is in flux. Some Realtors will tell you that comparing checking Active Listings is pointless because anyone can price anything at any price and it doesn’t reflect reality. PRO TIP: This is a Free Market and the prices set the market so if you have a savvy Realtor, who knows how to weed out the junk, you can get great information from the Active Listings.
The major difference is that a CMA will generally not include a very detailed inspection of your property. Instead the Realtor will ask you questions about the property and use that in their adjustments for the comparables. A decent CMA should cost around $50-$100 and will give you a very good idea of what your property is actually worth. PRO TIP: Beware of free CMA’s there is only one reason to offer something for free and that is to try and get your business, if the Realtor is willing to work for free the work will probably not be that good and worse it will probably tell you what you want to hear instead of the truth.
#3 The Realtor.com App
This app has gotten better and better over the years to the point where it now delivers recent data on sales in addition to date on current listings. You just have to know where to find the info because it is somewhat hidden. PRO TIP: When you open the app click on “For Sale” then click on the Menu button at the top left of the page that looks like an equal sign with an extra bar, sort of like this…”=”. In the menu you will see a button that says “Recently Sold” click in and voila you will see all the MLS listings that have recently sold near you. If you click on the individual listings it will tell you when they sold AND if they sold below, at, or above asking price!
This app is free and is awesome if you are looking for a really quick snapshot of your property’s worth. These days it is likely to be good news as I just checked my neighborhood while writing this and I can tell my property is appreciating faster than I thought!
These sites have been causing professional Realtors headaches for years because they claim to provide accurate “Zestimates” which get sellers calling agents thinking they can get way more from their property than it’s actually worth. The problem is that these sites use algorithms to “Guestimate” the value of a property, so they don’t take into consideration any of the specifics of the home. Nobody knows what figures they actually use but most likely it is just bed bath count and square footage and those facts rarely tell the whole story with a home. Use these sites at your own risk because more like than not you are not getting accurate information. PRO TIP: If you want an estimate of value for free use the Realtor.com app and look at the pictures of the homes that have been sold and then using the other facts about the property make your own educated guess instead of using a computer to do it for you.
So we hope this has give you a better idea of how to determine how much your rental property is worth. If you would like a professional CMA we would be glad to help and we can even refer you to excellent appraisers that know your individual market. Additionally, we can offer you something that most Realtors cannot and that is a Rental Income Analysis of your proeprty to determine exactly how much rent your property should produce. Check back soon for more details on how a Renal Income Analysis works, or call us today at 305-517-3900 to discuss it in person.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.