This is an archived article that was published on sltrib.com in 2010, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
If you're like most homeowners in Utah these days, you are probably wondering just how much (or little) your home is worth.
But determining your property's value — three years into one of the worst real estate downturns ever seen — is far from easy.
It doesn't matter what you paid for your home. It also doesn't matter how much you owe on your mortgage. What your neighbor sold his home for six months ago? Nope. Also irrelevant is what the home down the street is listed for now.
So how do you get an accurate snapshot of your home's value if you're considering selling or refinancing to take advantage of low mortgage rates? Here are some of the ways to put a price tag on the largest investment you'll probably ever make — and insights on just how accurate those methods really are:
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Appraisal • It's the most expensive of the options, but it's also probably the most accurate way to gauge how much your home is worth. For about $300 to $500, appraisers take the recent selling prices of comparable properties in your area and adjust for any differences. A full appraisal requires an examination of the exterior and interior of a property.
"Your home is worth only what someone is actually willing is to pay for it at any point in time," said Ron White, a residential appraiser in Salt Lake City.
An appraisal is the best guess of what that price is. But in this type of market, even appraisers are having a difficult time pinpointing a property's value. That's because prices in many areas are still falling, and in some neighborhoods there are so few homes actually selling that there are few comparables.
"It is very difficult," White said. "I used to be able to go into an area and find multiple comparable sales. Now, sometimes, if I'm able to find a handful of sales, I'm very lucky."
At the height of the market, full appraisals weren't so crucial. In fact, many lenders ordered so-called drive-by appraisals when borrowers were refinancing in which appraisers viewed the property only from the outside. "The problem is that you can't see the condition of the home, and you may not know how much of the basement is finished," White said.
These days, full appraisals are more the norm. And so is the shock over how far values have fallen.
At the beginning of the downturn in mid-2007 and 2008, many homeowners had inflated views of what their properties were worth and refused to accept reality, Realtors say.
Today, most sellers are fully aware of what has happened to the prices of homes, including their own, although many are frustrated or upset when they see the bottom line on paper.
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Recent comparable sales • The next best thing to an appraisal is to look at selling prices for properties comparable to and near your property. The key is to stick with those as similar as possible to your own in terms of square footage, amenities and lot size. Any real estate agent can provide this information.
Selecting properties that have sold recently is important along the Wasatch Front, where prices have been falling. "I have properties listed in the $400,000s and $500,000s that sold for $1 million four years ago," said Micah Pearson, a Realtor with Keller Williams Utah Realty in Salt Lake City.
Comparables that sold six months or more ago may not be adequate for comparison purposes. To get a good idea of what your home is worth, shoot for at least three comparables; five is much better.
To get the most accurate value, you also must consider selling prices in a fairly small area. Some streets, for example, have been hit harder than others by distress sales and foreclosures, which may drive down values more than another area even a few blocks away.
"You have to stay very close to the subject property to get the most accurate price," Pearson said.
One problem with this method — not accompanied by an appraisal — is that you don't get a professional analysis or an adjustment for differences among the properties being compared. That means you could end up coming up with a value for your property that's a bit too low or too high.
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Your property tax assessment • Counties along the Wasatch Front have made an effort in recent years to make their assessment of market value more accurate, and in many cases the information has become more precise. But there are instances where values set for tax purposes really miss the mark.
David Harrison of Cottonwood Heights, for example, chuckles at the county's market value of $528,000 for his property. "Homes have sold within a block of me — all comparable in size and condition — only in $400,000s," he said. He figures the county's market value wasn't even right a year ago, but today it's at least $70,000 too high.
Still, many folks put a lot of stock in their assessed values. "They look at their tax value as a good indicator of what their home is worth," said Realtor Pearson.
But he thinks owners should consider assessed values a ballpark estimate of sorts.
Salt Lake County Assessor Lee Gardner said the declining home market, and the high number of short sales and foreclosures in some areas, have made determining value more difficult. Homeowners may not realize their neighborhood has been affected by distressed properties to a greater degree than another area nearby.
Also, many people don't realize that the county's market values are a snapshot only as of January. Eight months later, those assessed values probably aren't accurate, because prices have continued to fall.
Although assessed values may not be the best gauge, they probably aren't the furthest off the mark, either. Probably the least accurate method of determining your home's value — in Utah anyway — is the Internet.
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Zillow.com and similar sites • Homeowners nationwide are attracted to sites such as Zillow.com, which lists home values by address. These sites can be remarkably accurate in areas where a wide range of selling information is publicly disclosed.
That's not the case in the Beehive State.
Utah is a nondisclosure state in terms of real estate information, meaning that little information about home sales —such as selling prices by address — is publicly disclosed. Unlike some states where websites can easily obtain large quantities of selling prices of individual properties, Realtor groups in Utah release information about homes sales only at the county level or Zip Code level.
Plus, it's impossible in Utah to get good information about selling prices of new homes because many builders locally do not list their properties on the Multiple Listing Service. And there's no information available on properties that sell without a Realtor.
Exactly how sites such as Zillow.com come up with property values in Utah isn't known because the company won't divulge its proprietary formula. Some real estate experts in Utah speculate the site relies heavily on county assessment information.
One thing is for sure. Zillow's values for Utah can be far off the mark.
A listing for home in Farmington, for example, shows a value — or "zestimate" — of $560,000. But that property has languished on the market for much of 2009. Owners took it off the market earlier this year after lowering the price to around $400,000.
Bill Heiner, president of the Salt Lake Board of Realtors, says Zillow is about $80,000 to $90,000 off in the value of his home. "Zillow is a pretty worthless tool in Utah," Heiner said.
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The Salt Lake Tribune's Zip code report • The newspaper has a database of median selling prices by Zip code area for each quarter as far back as 2003. Compiled with information from the Salt Lake Board of Realtors, it is a good way to monitor trends in home values in cities along the Wasatch Front. But it's not particularly good at helping homeowners zero in on the value of their individual properties, which is one reason why county assessors don't consider it a viable tool for appealing property tax valuations.
But it can be quite fun to check out selling prices in Zip codes. To get to the database, go to sltrib.com/Money and click on "View our Home Sale Database."
Find out how much your home is worth
What matters
Recent selling price of comparable properties in close proximity to your home
Your home's amenities and condition
Your lot size
What doesn't matter
How much you owe on your mortgage
What you paid for your home
Listed price on your neighbor's home