How do they determine the value of a car or a house?

Question

just wondering

Answer 1

The value of anything -- including cars and houses -- depends on what someone will pay for it. In the case of things that have a lot of statistics and data (such as sales of cars and houses), experts have a good idea what a particular house or car will sell for. If the two houses next to yours sell for $300k and yours is similar, chances are very good that your house will sell for $300k.

Answer 2

The value of the car is determined mainly by the resale value- use NADA or Kellwy blue book, look at any options the vehicle has plus mileage +/- for adjustment to normal wear and tear.

Housing values are determined by "comparable" markets. Similar houses which have sold in the area - th elcoser to the style you are looking at and the more recent the better. There are always anomllies, places which either sell for much higher or much lower due to specific cercumstances- watch out for these. IF you have a specific address in mind you can check out its "value" and comparable on www.zillow.com

Answer 3

For cars you can check www.nada.com or www.kellybluebook.com. All values are assumming there is not major damage or problems. If it is in exceptional condition and low mileage they may up it from nada or kelly blue book.

Homes are a bit more complicated. Appraisers must get specialized training to put a value on property. Many things go into the value like location, age of improvements, obvious problems, and what they call comparables. Comparables would be easy to find in a subdivision but more difficult for a uniquely built property out on a private lake. Never, ever try to have a $300k house in a $100k neighborhood, you'll never get what you put into it.

Hope this helps.

Answer 4

They determine the value of a house by camparible approach. they look at the homes in your area that were sold within that last few months, usually in about a 3 mile radius, if you are in a sub urban or urban area. Then they compare the condition of your home to the others
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Answer 5

These things are determined by what the market in your area will bear. Say everyone in your town starts buying white mini-vans, that would make them more valuable and the prices would go up, If people stopped buying new homes then the price of new homes will come down. Supply and demand it"s what makes the world go around !

Answer 6

How to value a property during market downturn?

Housing market continues to slump. Now we can calculate true value of a property easily. As price decline, we don't need to guess and factor in the potential price appreciation while calculating home value. Without the guesswork, figures are more accurate.

Let's use following example:

Today, a typical 15 years old, two bedrooms condo/townhouse is priced around $500,000 and $550,000 in Sunnyvale, California. Rent for similar condo/townhouse is $2000/month.

If you are a home owner, $2,000/month in rent means $20,000 a year in profit ($24,000 per year in rent, minus $4,000 maintenance costs). A $20,000 income is equilevant of owning $400,000 bonds or CDs, because current yield of 30 Years U.S. treasuries are 5% (5% of $400,000 is $20,000). Bank CDs have similiar yields.

In our example, the two bedrooms condo/townhouse is 20% to 25% overpriced. They should be priced at $400,000.

It is interesting to note that if we redo the calculation from buyer's perspective instead of seller's perspective, the figures are even more shocking.

Mortgage payment consists of two parts: mortgage interests and mortgage principal. The interests portion is similar to rent. If you pay interest, it disappears and doesn't add equity to the property. To fully simulate characteristics of renting, we assume buyer will apply for a zero down, interest-only loan.

It turns out that rent of $2000/month is equivelant to mortgage payment of a $340,000 loan at 7.0% APR. And comparing $340,000 loan to $500,000 or $550,000 price tag, from buyer's view, the two bedrooms condo/townhouse is 30% to 35% overpriced.

One may ask, why is there a discrepancy between two perspectives of the buyer and owner?

The discrepancy is a result of 2% differences in interest rate that buyer borrow comparing to yields of bonds and CDs that owners would get. We understand that buyer would always pay more. That is the premium of buying to own. However, looking from home owner's perspective, current housing market is probably 20% to 25% overpriced. We recommand investors to wait for a better entry point.

http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?postversion=2006090814
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm?postversion=2006090514