What’s Your Financial Position In Your Home?

December 15, 2020, Forbes Magazine published an article listing Tacoma as one of the hottest markets in the nation. In fact, Washington State’s three largest cities all placed in the top ten in the list. Two days later, on December 17, 2021, KOMO News published a report that proclaimed Tacoma as ‘the nation’s hottest housing market.’ 

Houses in the Tacoma market were selling much higher than the listing price and they were selling quickly. The prolonged frenzy of the Tacoma area market was extended due to the pandemic, and many homeowners were reluctant to put their homes on the market due to the uncertainty of the economy and of the potential to find a new home to purchase. While the number of homes for sale decreased, due to the low interest rates, the number of buyers increased.

For those who decided to sell during this time, they saw a significant appreciation in apparent home value and quick sales. During this time one of the questions I am most frequently asked is, of course, what is the value of my home. The answer to this question may not provide the information the homeowner actually wants to know. And, in addition, there are some pitfalls to the question depending on who you ask.

Valuation

To many, the question revolves around the concept of value. Value is often thought of as the estimated monetary worth of something. Notice that this is an estimated number and based upon worth, which is very subjective. What the seller really wants to know might be the estimated market value of their home. This would be the price that the seller might expect to get for their home on the current market. This information is important to know, but it is not the only piece of information needed to make a monetary decision to sell. Ultimately, a seller is going to need to know the net proceeds of the home. The net proceeds is the money that they will receive at the close of the transaction after all the costs of selling and paying off the loan are paid. This is very different from the purchase price.

Understanding the difference between the different types of valuation tools will help you to make a decision on the sale of your home.

This will give you a general estimate or range of the value of your home. This is based upon some broad-based information gathered through public records and other resources. To get an idea of your home’s valuation you can go to a Home Valuation site and enter the information about your home. This will give you a general idea of the value of your home.

Comparative Market Analysis (CMA)

This tends to be a more accurate evaluation of the estimated market price based upon more details gathered from a home inspection by a qualified and trusted broker. With a CMA, the broker looks at more details, such as the neighborhood, the curb appeal, the interior and exterior condition and presentation of the home, the upgrades and remodeling, the floorplan, and many other details. The broker will then contrast it with other homes that have similar features and look for sold and listing prices as well as days on the market. Scheduling a market analysis for your home is usually the best start in making a decision on selling your home.

Net Proceeds

This is the report that will give you an estimate of what you will receive in cash at the closing of the transaction. This is the amount of money received after the loan has been paid off,  and the fees, taxes, utilities, commissions, and other monies owed have been satisfied. This is your net proceeds from the sale of the home. Requesting a Net Proceeds Report is the next best step after the CMA.

For more information and analysis, please schedule a free consultation with us. We also have information and checklists for both the Buying Process and the Selling Process.