How Much Is Your Home Worth?

H is for home value, in the Alphabet Game, bankruptcy experts across the country blog on different topics.

I always ask potential clients this question, how much is your home worth?, I mean, really, and the response frequently is something like:  well, it is worth $200,000, but right now, I can only get maybe $160,000 for it.”

So, what do we mean by “worth”?

There are state tax valuations, which are normally not worth the paper they are written on, and worth even less these days.

How about that last bank appraisal?

The one you did for the re-finance back in 2008 or earlier?

Uh, no good.

Most appraisals during those peak bubble  years were bogus, done to hit a number that would allow the mortgage to go through and the mortgage broker to take a commission.

What I mean is, what would a willing buyer pay, right now, as is, no painting or other fix up.  Your best guess as to the actual market price, usually based on sales of similar homes close by.  Almost everyone I talk to has a foreclosed home, or more than one, for sale nearby.

If your neighbor’s house is basically the same as yours, maybe a little better, and is for sale for $150,000, that means, it is worth less than that, or someone would have purchased it at that price.  So, your home is also worth less than that.

Doug wrote about renting v. buying a home this week, and I recommend everyone do this.

If you are in a home now worth less than what is owed, and have trouble making the payments, you need to figure out the answer to our question:  How much is your home worth?

Most of us, due to wishful thinking, I suppose, overestimate the value of our home.

Get a free estimate from a local realtor, but, get a good answer on the value.

Don’t assume prices are going to rebound soon, either.

I have seen estimates of another 20% decline in home prices over the next year.

You cannot do intelligent financial planning without knowing stuff like this.

image credit:  Dreamstime

OTHER LETTER “H” TOPICS:

Hearing    Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell

Bankruptcy Hijacking Los Angeles attorney Christine Wilton
Homeowner’s Association Dues    Marin County Bankruptcy Attorney, Catherine Eranthe
Household    New York Bankruptcy Lawyer, Jay S. Fleischman
House    Northern California Bankruptcy Lawyer, Cathy Moran
Homestead    Colorado Springs Bankruptcy Lawyer Bob Doig
House    Los Angeles Bankruptcy Attorney, Mark J. Markus
Household Size    Hilo Bankruptcy Attorney, Stuart T. Ing
Honesty    Cleveland Area Bankruptcy Lawyer, Bill Balena
Honesty (and Fraud Avoidance)    Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
Harassment by Creditors    Downriver, Michigan Bankruptcy Attorney, Christopher McAvoy

Household Income Livonia MI bankruptcy attorney

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12 Responses to How Much Is Your Home Worth?

  1. Kurt,

    Nice job. You are spot on. I have had many similar discussions with my clients about the financial impact of retaining their home when it is currently upside down. Does not make sense to modify a loan by extending the term another 10 years. Those who have refinanced within the past 10 years are still looking at a 30 year mortgage on an overvalued piece of real estate. It will take more than 20 years at regular payments to probably break even. That is a long time.

    I hate to disregard “hope” but these are major investments. You need to be very realistic. If you are filing bankruptcy why not take advantage of its many benefits – like discharge of mortgage debt.

  2. The other piece of the puzzle is how the cost of living in the home compares to renting. If the cost of living in the home is not significantly more than the cost of renting, then there is no harm in staying put. Just so long as the “homeowner” understands that the real estate is housing, not an investment on which they can retire.

  3. And no doubt you get the same sort of dialogue:

    It’s worth $200K.

    I see, could you sell it today for that?

    Oh no, today I could only get $125K. But it’s “worth” more…

    oh…..

  4. Thought about selling our house over a year ago. The realtor advised a private appraiser of old homes look at our 1800 century farmhouse. The appraiser loved the property, house, charm, couldn’t stop talking about the beauty of it. We were shocked when we received the appraisal and the low figure on it. We thought the house was worth $100,000s more
    : ( It was a real wake up call to how far the market has fallen in NY.

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