How Not To Arrive At Your ME Home’s Market Value
Flawed ways of arriving at the real value of your Maine home or any other real estate property you are toying with selling.
In studying for my Maine real estate broker’s exam in 1979, in the valuation courses with Bangor Maine appraiser Ted Sherwood I was taught three primary methods for valuation of real estate.
The market approach of comparing the home or whatever property type to others that have sold in the last six months to a year in the market.
Coupled with other properties like it for sale currently “competing”, vying for real estate buyers in the open market.
The income approach to real estate valuation applied to a multi unit rental property or a mom and pop grocery. To determine the valuation based on the horsepower size of the net profit after all the expenses are paid.
And the cost to reproduce the property from scratch after it burns to the ground by fire, an act of God peril.
This approach to Maine real estate home or structure valuation used more in for insurance claim situations. When the improvements on the property, land are damaged or totalled out the structure completely. And its time to start over, replace what was there before the loss.
Those were the big three real estate appraisal approaches I was taught by the best teacher I could have had for the ABC’s of valuation. The education that helped me big time to ace the Maine broker’s exam in 1980. But here are a few more valuation approaches that we did not learn about in Ted’s class. That are not text book approved, real world applied as golden rules to arrive at today’s fair market value of your Maine home or other type of real estate.
The “size of your family approach” to an estate sale Maine home valuation. Clever simple math exercise based on absolutely no factual real estate appraisal logic. If there are eight kids in a family, and all want to clear $10,000 a piece after the real estate brokerage and lawyer’s fees, then value in the minds of the heirs means list it for $85,500. There, that was easy.
In the day and age of only the 1.6 kids per family average, the mother goose size flock of brother and sister tribes would cause extreme valuation inflation.
Had one elderly widower who called, asked over the real estate office phone “how much do I have to list my Maine home for to assure it will NOT sell?
This poor fellow was trying to appease his kids who wished he lived closer and worried about dear old Dad since mom had passed away.
The sky high approach in the nose bleed bracket of the Maine real estate mls search to assure the property, home had not a hill of beans chance of actually getting to a closing.
Strictly for show for the kids Maine home valuation approach.
He had no desire to give up his comfortable Maine home where he was all settled in, where his neighbors looked in on him.
Cozy, and in a spot where he had a church family and community that was familiar to him. To trade it all in at this stage of his life to move to a totally unknown, start all over again strange new area. And to be alone while his kids were off working. Or they were chasing, shepherding his grandchildren to their over booked social and school sporting events schedule activities. Not so appealing from Dad’s perspective and life plan.
What you paid for it, what you have sunk in to the place, what the hairdresser or barber or your brother Bob’s second cousin who has never seen the Maine home thinks it is worth. None of these Maine real estate valuation approaches hits the actual home worth bull’s eye either.
Maine House, Any Real Estate Property Value Video
The real estate market lets you know what the property, the home, whatever is really worth TODAY. Here are some other classic although flawed approaches to real estate home valuation. What you wished it was worth, what it is insured for come up a lot in the property listing.
During the sit down at the Maine home seller’s kitchen table process. The latter always makes me think is the seller actually thinking of torching the Maine home out of desperation to move it for the higher insurance value? And searching the yellow pages in a seedy part of a crime riddled out of state city. To find the best arsonist for the job?
Often it boils down to the Maine home is worth more to the seller than any one.
Because that is the place where the family grew up. Their kids played ball, had a swing set, dog in that backyard. Celebrated holidays year after year by the fireplace in that home that represents the bulk of the owner’s life time on planet Earth. Precious, dearly valued items are let go of only at a higher price.
But unfortunately to a Maine real estate home buyer, the home is just a house. They come in to the picture with a blank Etch-O-Sketch gray graphite screen. Different than the one you the Maine home owner are holding, hesitant to let go of, to hand over to the new buyer.
MOOERS REALTY 69 North Street Houlton Maine 04730