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.

The Real Estate Closing Process

The Escrow Closing or Real Estate Closing Process is not as complicated as it seems, with a little help anyone can understand and feel comfortable with the process.

The escrow closing process follows certain steps in a certain order, once you understand these steps, the process becomes clear. Several of the steps are part of every closing; others are optional depending on the circumstances.

Real Estate Contract

The Real Estate Closing process begins when you make an offer by signing a purchase contract, and the offer is accepted by the seller. When this step is completed several people get involved in your closing.
The Title Company begins to research the title of the property. An appraiser and surveyor may also start working on your closing. These happen in the background, all preparing for the signing or closing.

Title Commitment Review

After signing the Purchase Contract, the title company will prepare a Title Commitment. The Title Commitment shows any liens, judgments and other problem with the real estate title or ownership.

It is also a commitment to insure the property in your name at closing, subject to any terms contained in the Title Commitment. Review it carefully and call the title company with any questions.

Disclosures Review

Before closing, the seller is required to make disclosures to the buyer. These disclosures vary from state to state but include any leases that may be on the property as well as other things the seller is aware of.

If there are building on the property the disclosures should also include any problems or required repairs on the buildings.

If the disclosures show significant problems you have a certain amount of time to cancel the deal. The exact amount of time you have to cancel is spelled out in the purchase contract.

Appraisal

An appraisal is performed by a licensed appraiser, who uses recent land sales, to estimate the market value of your land.

If you requested an appraisal on the property, you should receive it before signing. If you do order an appraisal, the purchase contract should be conditioned on the property appraising for at least the purchase price. The appraisal is optional.

Land Survey

A Survey is often part of the real estate closing. The Purpose of a real estate survey is to mark the property boundaries, and map them in relation to the surrounding properties.

If there isn’t an existing survey on the property, and the boundaries are not marked, you need a survey.
Surveys are often required when you build a house on the property. If you plan on building in the future, this is good time to get a survey as the seller may pay all or part of the cost.

Property Inspection

The inspection is your last chance to look at the land again before you buy. This is usually scheduled just before signing.

Depending on what you are buying this could be very important. If you are buying land only, it may be less important, but if you are buying land with buildings, equipment, etc., this is the time to make sure everything is in working condition.

Real Estate Escrow Signing

Finally, it’s time to show up at the designated place to sign the Real Estate closing documents. This is sometimes referred to as the Escrow closing, although the entire process is part of the escrow closing. The previous steps may happen without your knowledge, and explains why it takes so long.

You will need to bring the required money to close. The amount should be certified funds (cashier’s check, wire, etc.).

This is the time to review all the papers and have any questions answered. This is your last chance to have any concerns addressed by the seller or realtor. Once you sign the papers the land and any problems are yours.

Document Recording

After signing, and after the money has been cleared, the title company will record the deed, transferring the property into your name.

If you borrowed money to purchase, the mortgage documents will also be recorded. After the recording is completed, you become the official owner.

Possession

Date of possession will be sometime after Recording. It is usually an agreed number of days after the recording, as agreed in the purchase contract.

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