How to Calculate Real Estate Values

How To Calculate Real Estate Values

The most important step when buying or selling property is to decide the real estate values. I recently observed two land purchases. The two parcels of land were almost identical. Both were 10 acres of vacant land next to one another. The first parcel sold for $5,000.00; the second for $47,000.00. Almost 10 times more!

What was the difference? The first buyer paid a fair price after calculating the real estate values, the second buyer paid ten times what the property was actually worth because he didn’t.

Every piece of real estate is different and prices vary in different areas. It is impossible to say exactly what a piece of land is worth at any given moment. The best definition is “real estate worth whatever someone is willing to pay”.

However, the following tips will give you an idea of what specific types of land in a specific area are worth.

These 5 tips explain methods to discover approximate value of a parcel of land. Following these methods you won’t pay 10 times what it’s worth. When you buy you can know you paid a fair price.

Look at Recorded Deed to calculate Land Value

In most states the seller is required to include the real estate prices on the deed. The deed transfers the property to the buyer when recorded at the local recorder of deeds. This is usually a County Recorder.

When recorded these deeds are public record. You can visit the county and see what the property values were at the time of sale. Remember values vary depending on the economy and other factors. If the property sold some time ago the value could have changed.

Look at County Assessed Value

Counties assess properties (determine property value) for taxation purposes. Property taxes are based on the property’s market value. This is also public information and can give you an estimate of the property value.

Keep in mind that county assessed values often lag real market value by several years so assessed values won’t be exactly the same as market value.

Ask a Realtor for Property Values

An experienced realtor knows the property values in his area better than anyone. If you are working with a realtor make sure you are shown multiple properties.

Remember the realtor may be working for the seller and has an obligation to get the highest price possible. You can also ask a real estate broker to give you an estimate of real estate values for a fee. This is often called a BPO (Broker’s Price Opinion).

Realtor.com, Zillow.com and Trulia.com

Realtor.com, Zillow.com, and Trulia.com are three of the most popular websites listing property for sale. Asking prices are listed so you can research properties in your chosen area.

Remember this is the price the seller is asking for the property, not necessarily the real estate values. Most sellers assume they will lower the sales price in negotiating the sale.

Realtor Company Websites

Similar to the tip above, is the real estate company’s website. The real estate company’s website may list the properties they have for sale and usually have more details and pictures than the sites above.

Property appraisal or determining real estate values is not an exact science. Even two appraisers will not calculate the exact market value of land or real estate. The above tips will give you an idea of its value, and help you avoid paying many times what it’s worth.

4 Biggest Mistakes when You Buy Property. Paying too much for the real estate is the biggest of land buying mistakes. Every parcel of land is unique. You can’t “look up” the value, making it difficult to know the right price. This especially applies in Utah Real Estate as the previous sales price is not disclosed in public records.

9 Questions to ask Before Buying Land. When Buying Land your are making a big decision and a big investment. Go slow, ask questions, and learn everything you can about the property before you buy. Below are some of the important questions to ask.

Using a Real Estate Agent. Buyers and Sellers should find an experienced, trustworthy Real Estate Agent and let them guide you through the land closing process in Utah. A Realtor is your best friend during this process and will walk you through it from beginning to end. They will help you avoid many of the pitfalls and problems that arise when buying land.

February 16, 2016

9 Questions to ask Before Buying Land

When Buying Land your are making a big decision and a big investment. Go slow, ask questions, and learn everything you can about the property before you buy. Below are some of the important questions to ask.

Should I Use A Realtor when Buying Land?

I believe in most cases you should use a realtor when buying land. The realtor is paid a commission from the seller so there is no charge to you. Why not use an expert for free?

Am I Paying A Fair Price?

Real Estate prices vary and it is hard to calculate an exact value for a piece of land. Be careful, look at similar parcels of land that sold recently to get an idea of the value when you are buying land.

Are There Land Use Limits?

There are many possible limits or restrictions on how you can use a parcel of land. Many restrictions are government regulations. These could include Zoning restrictions and Building Permit Requirements. You should also look for CCR’s (Covenants, Conditions and Restrictions.

Can I Connect To Public Utilities?

If the land is not already connected to electricity, water and sewer there can be significant costs in connecting. You may need to drill a well and install a septic system instead of connecting to water and sewer.

Does The Land Have Title Problems?

You should use a title company to handle the closing and insist on an Owner’s Title Insurance Policy when you buy land. This will insure you against any title problems, including liens, judgments, forged deeds etc. Have the title company explain the policy and any exceptions to coverage at closing.

Do I Have Legal Access To The Land?

Legal access means you have the right to use the roads leading to your land, crossing any property between your land and the nearest public road. The title company should insure access as part of the Owner’s Title Insurance Policy.

Who Owns The Mineral Rights?

The Mineral Rights are often owned by a different person than the surface rights (what we commonly think of as the land). If the mineral rights are owned separately the owners of the mineral rights may have the right to enter your property and set up equipment to extract their minerals.

Do I Like The Neighbors?

Before you buy land, meet the neighbors. While you are getting to know them ask them what they know about the land. They may have information that the realtor doesn’t.

Do I Like The Area?

If you find a parcel of land that you like but dislike the area you will end up disliking the land too. Investigate the local schools, the stores, the community and the roads you will travel.

Don’t forget to find out what the area is like in the winter and the summer. Of course this doesn’t cover everything you should look into when buying land, but it gives you a place to start. Remember caveat emptor (buyer beware), when buying land.

6 Reason to use a Real Estate Agent. Buyers and Sellers should find an experienced, trustworthy Real Estate Agent and let them guide you through the land closing process in Utah.

Understanding Mineral Rights. Mineral rights are a cause of controversy among property owners. This is especially true in areas with oil and gas exploration. Owners of these rights have certain rights which are difficult for land owner’s to accept. These rights are often called oil rights or sub-surface rights.

How To Calculate Real Estate Values. The most important step when buying or selling property is to decide the real estate values. I recently observed two land purchases. The two parcels of land were almost identical. Both were 10 acres of vacant land next to one another. The first parcel sold for $5,000.00; the second for $47,000.00. Almost 10 times more!

February 12, 2016

4 Biggest Mistakes When You Buy Property

4 Mistakes when You Buy Property

Of the 4 biggest mistakes when you buy property, paying too much for the real estate is the biggest of land buying mistakes. Every parcel of land is unique. You can’t “look up” the value, making it difficult to know the right price. This especially applies in Utah Real Estate as the previous sales price is not disclosed in public records.

You must have an idea of the value before you make an offer to buy property, don’t assume the price you are quoted is even close to the actual value. The seller is telling you what they want to sell it for and that may be 10 times what it is actually worth.

Falling In Love Before You Know Facts

Love at first sight. It might work with romance but it doesn’t work with land. Don’t fall in love with a piece of land until you have all the facts. This is a very dangerous mistake when buying property.

What negatives does the land have? Do you like the area? Do you like the neighbors? How is the road that accesses this property? Will you still like the land in 5 years? Slow down, don’t rush into an offer. Take a deep breath and think about it before you sign the contract.

Don’t Buy Property With Title Problems

There is no reason to buy land with title problems. Use a title company, get a title insurance policy, which will protect you against title problems. I have seen many sad stories of people purchasing land and finding problems later.

Never believe the words, “ I have owned it for years and I know there are no problems.” There could be problems the seller is not even aware of. A Title Insurance Policy will protect you.

Don’t Buy Property Without Legal Access

It is possible to buy land and have no right to access it. This happens when you must cross other land to access yours, and have no legal right to cross the other land. Make sure the title company is insuring access to the property. If there are problems with access in the future they will fix it.

NOTE: Legal access does not mean there is an actual road to your property; it means that you have a right to access your property which may require you to build a road.

Conclusion

First, make sure you don’t pay too much for the land you choose. Next, take your time and look at everything, weighing the pros and cons, before you decide to buy. Finally, get a Title Policy to protect yourself against any problems, including lack of access. These are land buying mistakes you can avoid.