It’s a good time to be a home owner...finally! Home values are rising, sales are up again, and lenders are lending. All over town, you don't have to go far to see an active construction site. It's hard to believe just five years ago home values had bottomed out.
In the last 5 years, the average home value has jumped 46%, from $119,000 to $174,000. In Oro Valley, we saw a gain of 30% for the same period. This is a healthy rebound, but it's certainly not the values we saw back in 2008. The good news is Tucson market as a whole is expected to gain another 4.2% in the next year.
Now that the real estate market is gaining value, you may be asking yourself a very important question - What's my custom home worth? If you are in a housing community where you can compare the same homes, you'll probably be able to get estimated values based on past sales. Realtors call these comps, or comparables, and many think they are the best way to determine house values.
But what if you built a custom home?
Determining the value of your custom home is much more subjective. No two custom homes are the same. The beauty of a custom is that you had total freedom when you built your house. You may have added a home theater, installed some exotic flooring, or built a separate garage for your RV. Whatever the features, you made it your own. Typically, when someone wants to value their house, they can look at the value of other homes in the neighborhood or even look at the value of neighbors with the same floorplan. That doesn't quite work if your home is totally unique!
You may put a bunch of upgrades into your house, but a lot of that may not be taken into consideration by a home buyer. You may have paid a million dollars for their home, but that custom roof deck with a spiral staircase probably won't be valued as much as you paid for it. The 12-seat custom theatre may have brought your family hours of entertainment, but a buyer may just be converting that into the baby's playroom!
Important factors when valuing a custom home:
- Lot sizes and characteristics
- Where is the home located? In a gated community? In a country club?
- Community amenities
- Quality of construction
- Custom features
These are just a few of the things that can set your custom home apart from every other home. The key to getting an accurate value on your home is to get the right help. Let's look at your options.
Hire a Professional Appraiser
A licensed real estate appraiser is your best bet to get the most accurate appraisal of your custom home. This is all they do, day in and day out. Your local appraiser knows the neighborhood, often knows the work of the builder, and is certainly qualified to put a value on all the unique features of your custom home. On average, you can expect to pay $200-$700 depending on the company and how large your house is. The result is arguably the most accurate value of your custom home, which is certainly worth the few hundred dollars if you home is considered a luxury home.
One thing to note - do your homework on who you hire as your appraiser. Make sure they are local, and not from outside our area. Check their credentials, and find out how much experience they have valuing custom homes.
Depending on their experience, your local real estate agent is also an excellent resource for determining the value of your home, although this method isn't as accurate as a real estate appraiser. Realtors most often use "comps", or comparables, to determine the value of a home. The problem with custom homes is no two are alike. What if the home is so custom that it has completely unique features you won't find anywhere else? Here's where the experience of that real estate agent comes in, especially if they have a history of working in the high-end, custom home market. Your Realtor may also be able to recommend the right appraiser, so you might want to ask them for a referral.
Websites like Trulia, Zillow, and Redfin are good for estimates, but the very nature of how they get their information makes it impossible to get an accurate value for a custom home. While we don't know their exact formulas for determining value, we do know that aggregating data form multiple sources simply doesn't give an accurate number for a custom home. You can use these sites for a ballpark value, but know it's truly an estimate and they have been proven to be thousands and even hundreds of thousands of dollars off.
If knowing the value of your home is important to you, then you will want the most accurate information you can get. Otherwise, a quick search online may just satisfy your curiosity - just don't plan on it being spot on.
We hope you are delighted when you find out the value of our custom home. If not, keep an eye out for our next blog, Ways To Increase The Value Of Your Home.
~ The Sombra Homes team.