An important aspect of my service is to let homeowners know what the value of their home is in today’s active market. Often I am directed by the seller to look at their tax bill as to the value established by their taxing community. I always do my homework when meeting with folks thinking about selling in the future. I bring the tax information with me so we can use that bench mark to compare other sales activity with homes sharing the same assessed value. The purpose is to establish value up to the minute in real time. After going over values of homes like their own, sellers are either happy or disappointed, depending on location.
We have all heard location, location, location. But along with that adage now comes condition, condition, condition. The tax bill assessment does not take into account the current condition of your home. It is solely based on current square footage, lot value and location. Assessors do occasionally change a value if you have taken out a permit to put on an addition, finish a basement or add a bathroom. Other than major updates your assessment is based strictly on the statistics they have used over many years. Assessments are updated every few years based on each community’s statutes. Most commonly they are updated every 2-4 years. But are these accurate?
The real estate market is always a moving target. World events can quickly alter the state of the real estate market as we have seen in the past. The melt down of 2008 is an example of how quickly our homes can change in value. Therefore, depending on when the last re-assessment was done, market values on tax bills can be off as much as 20%-30%!
I visited with two would be sellers yesterday. Each was in a different county. The first home was assessed at $190,000 but after going over comparable sales we determined that her home was worth $270,000! Her home was in good condition but not spectacular. As you can predict, that homeowner was ecstatic. Then I drove to my next appointment and met with some wonderful people who were a bit disappointed after finding out the value of their home. It was $30,000 below the tax bill market value! This couple’s home was in relatively the same good condition as the previous homeowner’s property. The response from these folks was the opposite of the one just prior. So as you can see, depending on your location your tax bill can be off by quite a lot.
The best way to determine whether or not your home’s value is similar to your tax assessor’s estimate is to either get a certified appraisal or have a Realtor stop out and give their opinion based on condition and comparable sales. That way there will be no angst as to the value of your home. It is also important for all of you to stay current as to what is happening in your area so you have accurate information about today’s ever changing market.
Here are some latest statistics and information I just received from the Great Milwaukee Association of Realtors. First, the very good news is that the average sale price in the 4-County Milwaukee Metro area has just surpassed the pre-recession peak of 2008! Again some counties are experiencing much greater gains than others. There is still a shortage of homes on the market and high demand. There is frustration among would-be buyers because they cannot find a home due to low inventory. This is great news for any of you thinking of selling as this current lack of listings will benefit you as a seller. Sales are ahead of last year. The first six months of 2017 was 10.4% ahead of 2015 which shows that the market has gained strength over the last two years. More good news for homeowners. The greatest gains were seen in Washington County, followed by Ozaukee county and then Waukesha county. Milwaukee county has mixed figures as it is composed of several cities.
Why is there such a lack of inventory? Sellers appear to be reticent about listing their homes due to several factors. Based on a GMAR consumer survey conducted in May, sellers indicated they were holding off on listing their home because of concerns about policy changes in Washington DC (i.e.mortgage interest deduction, taxes, health care), recent remodeling to their current home, and some holding out for higher prices. Potential sellers are also worried that if they sell will they be able to find a home in this tight market.
Tight inventory, plus high buyer demand is leading to increasing buyer frustration with the market, particularly among those searching for homes under $350,000. Buyers are seeing properties snatched up before they’ve had an opportunity to view them.
Many “move-in ready” homes are seeing multiple offers, but not the size or scale we saw in the early part of the last decade. The early 2000s were marked by buyers irrationally bidding up home prices by 10%-20%, assuming they would reclaim the values as the market appreciated. In the current market buyers are bidding prices up, but they are constrained by their borrowing ability and their lender’s appraisal.
The expectation by real estate pundits is that the real estate market will increase by 4%-7% over the next twelve months given no surprises in world events or economic factors. We can never know what the future may hold for us, but given where we were in 2008 and where we are now is truly a recovery we can all be thankful for.
Value is established by the buying public. What something of value is worth is dependent on what someone will pay. Buyers today are willing to pay a premium price if your home is well cared for and you time the sale based on which months bring out more buyers. Typically February-June is the best time to sell and September-October the second best months for successful outcomes.
Now you have it! You should look to your tax bill for a general idea of value. However, if you want a much more accurate assessment of your home’s value, consult a Realtor or obtain an appraisal. This way you will know exactly what your home is worth in real time. You can also get information as to what improvements you should make to get the best bang for the buck. You never know when exactly when you will sell so this is a great time to begin working on the condition of your home both outside and inside.
As always I hope my articles are helpful to you and giving you the information you are looking for. I am always looking for new ideas or topics for my monthly articles so if you have a moment you can email me at: Bruce@SeniorRealtor.com. I would be happy to get your feedback and ideas so that I know what is on your real estate mind!