Real Estate Value: Knowing yours is Key to Mortgage Success

The value of the real estate you own, whether it is your personal residence or an investment property, is critical to your mortgage and financial success. If the balance on your mortgage is close to or higher than the value of your property, your real estate is not the financial machine it should be. Therefore, if you want to be successful in real estate ownership of any kind, you absolutely must know how to determine the value of your property.

Now, there may appear to be a simple solution to this problem, you say. Get an appraisal. Sure, this would work, but appraisals are not cheap. For residential property, they begin around $175 and range to $400. For investment real estate, they can be much higher. Imagine owning 25 houses and needing to know the value for each. You certainly wouldn't want to pay for 25 appraisals. So, here is a simple formula for learning the value of your property.

1. Learn the average rate of appreciation in the neighborhood where the real estate is located. Almost any property will increase in value two to three percent each year, even in depressed areas. So, if your rate of appreciation is three percent and you paid $100,000 last year for your house, it is now worth at least $103,000, based solely on appreciation. You can learn this rate by calling a local realtor. Remember, in affluent neighborhoods, appreciation rates may range from four to eight percent.

2. Estimate the value of any improvements, using a ratio formula. That is, if you improve the structure of the property (new roof, deck, automatic garage doors, windows, etc.), all for about 30 to 40 percent of what you paid for the improvement. Now, this is a variable, depending on location, so don't take this as an absolute. So, last year I put all new windows in my house. It cost $10,000. I assume I can add $3,000 to $4,000 in value to my house. Cut that ratio to 15 percent for cosmetic improvements like paint, carpeting and landscaping.

3. Know comparable sales within one mile and within the last year. For example, if a house one block away that is almost identical to yours in dimension and style sold last month for $150,000, this is a great starting ground for your value. Now, remember your home may have things the other house didn't have, increasing your value even more.

4. Other home's asking price plays a small role. Realtors know their business. If you see a comparable home in the neighborhood, being sold by a realtor, check the listing price. Although not nearly as important as the other parts of the formula, this certainly plays a role in determining the value of your property.

So, use this formula, learn the value of your real estate, and you will wield an amazing amount of financial power.

Mark Barnes is an investment real estate and real estate finance expert. Get his free mortgage finance course at http://www.winningthemortgagegame.com. Mark is also the author of the new novel, The League, a shocking, sports-related conspiracy. Learn more about his suspense thriller at http://www.sportsnovels.com.

---

Conditions Are Right For Buying The Higher Priced Home You?Ve Always Wanted

Higher interest rates and home prices in the past have... Read More

10 Top Considerations For Those Buying Property Abroad

Are you one of a growing number of people considering... Read More

Look Past the Bottom Line for a Propertys Potential

It's unfortunate that many real estate investors tend to look... Read More

How to Sell Your House For Full Price

Many people believe that a real estate broker is needed... Read More

Lease Options or Rent to Own?

Finding a rent-to-own house is one of the many ways... Read More

Why Average Sale Price Statistics are Misleading

One of the most common statistics used when gauging the... Read More

As a Realtor, How Do I Attract Listings?

Have you ever noticed that despite the massive number of... Read More

Moving On: Powerful Tips For Selling Your Home

Maybe you're moving to a larger home to accommodate a... Read More

Homebuyer Heaven Can?t Possibly Last

With interest rates at record lows over the past year,... Read More

10 Ways To Find Investment Properties

If you really want the best deals in investment properties,... Read More

Home Warranties: Are They Too Good To Be True?

What is a 'Home Warranty?'A home warranty is like an... Read More

Lease Purchasing Is The Perfect Home-Based Business

Some call it the 30 second commute. We call it... Read More

At Home In Your Overseas Home

Homeownership, in any form, is a big step for most... Read More

Basic Real Estate Valuation

Given the current interest (dare I say hysteria) associated with... Read More

A Singles Game of Real Estate

This discussion leans toward answering questions asked most often by... Read More

How to Sell Your Home Without a Real Estate Agent

Considering the rapid rise in home prices over the past... Read More

Burn, Baby, Burn!

Luxury homes are lots of fun to inspect. Sure, the... Read More

The Cat in the Attic

Strange and unexpected things happen during home inspections. Seldom are... Read More

Selling Houses: Flooring & Feelings

Buyers think they love Italian tile and other hard floor... Read More

Property Investing

Wrapping a property is a simple concept that can create... Read More

Mancos Real Estate

Real estate: availability and costIn 2000, the median home value... Read More

Setting Goals for Real Estate Success

The power of goal setting has been well documented and... Read More

Dealing With Difficult Tenants

When managing residential properties one bad tenant can often undo... Read More

High Profit Real Estate Investing--Make a Good Deal Every Time!

Knowing what a Good Deal is ? Is the Key... Read More

Late Mortgage Payments Sabotage PMI Cancellation

There's something you should know about PMI!Private mortgage insurance is... Read More

Finding Structural Problems During Escrow ? Small Rural Home Example

In rural home purchases, the transaction is often subject to... Read More

Real Estate Investing ? The Job Escape

Real estate investing is pretty unusual in lots of ways.... Read More

Regarding Real Estate On Leased Land

1.Why are there so many properties on leased land?There are... Read More

Finding the Right Buy to Let Mortgage for Your Investment Property

Finding the right buy to let mortgage is crucial to... Read More

Four Reasons To Offer Seller Financing

An example of seller financing: Years ago I bought a... Read More

Home Appraisal Values Are Critical

To most, owning a home is a necessity, but sometimes... Read More

Choosing a Residential Lot

Finding a lotPlanning for your new home is a very... Read More

Real Estate Investing - Maximum Leveraging of Your Money

At this moment, you have access to some amount of... Read More