For two plus years real estate sales in Howard County have been soft. And, while not as soft as other parts of the country, this has local buyers hunting for “a great deal.” But, if you are a home buyer in this market – how can you be sure of getting a “great deal”? And, if you are a home seller right now – how do you make sure that your home is a “great deal”, so that someone will buy it?

This will be the first of three short articles on the buying side of this market: (1) How to Recognize a Good Deal; (2) How to Find The Good Deals; and (3) How To Negotiate A Good Deals. Afterwards, we’ll write about this market from the seller’s point of view.

How To VALUE A Home

(RECOGNIZING a “Good Deal”)

Over the years we’ve developed something we call the Current Assessment Ratio to use as a rule of thumb to determine when a home purchase is a “good deal” or not compared to the current market.

First, we research a sampling of recent Howard County home sales. We take the average Howard County tax assessment value of these homes and then divide that number by the average sale price of those homes (less the value of seller cash credits given to buyers). 

This site allows you to search all homes for sale in Howarad County by any Realtor(R).  However, to find the records for Howard County homes that have actually sold recently, you need to contact a local realtor, like the John and Angela Team. 

Here’s an example. Suppose a sampling of 10 recent sales of single family homes shows an average sale price of $400,000, average cash credit from seller to buyer of $6,000 and an average property tax assessment value of $415,000. You would take the average sales price ($400,000), subtract the average seller cash credit ($6,000) and divide by the average property tax assessment value of $415,000 to yield a Current Assessment Value of 105.3%.

Now you have a tool to assess the reasonableness of any home’s asking price.  (For help in determining this ratio and/or for questions or other help checking the pricing of any Howard County home for sale, contact the John and Angela Team by email).

Suppose you’ve seen 10 homes and really like Elm Street the best. They’re asking $485,000 – is it a good deal?  All you need is to locate the Howard County property tax record for Elm Street, look at it’s current assessed value, multiple that value times the Current Assessment Ratio, and voila – you have a very good measure of the home’s “real” value in today’s market.

In the above example, if Elm Street’s assessment is, say, $475,000, that means it is already “priced to sell”, as it’s asking price of $485,000 is only 2.1% above it’s assessed value, while most homes are selling at 5.3% above assessed value. But, if Elm Street’s assessment was only $410,000, that means its Current Assessment Ratio is 118.3% – the owner is asking 18.3% more than its assessment value, even though most homes sell for only 5.3% above assessment value.

The Current Assessment Ratio is a tool for determining, generally, a home’s value in the current market. It does not replace the need for an appraisal, and of course different homes will sell for varying degrees above, and below, the Current Assessment Ratio. However, for being a simple-to-use rule of thumb, the Current Assessment Ratio is an excellent help for determining when a home is priced well or not.   (Contact the John and Angela Team to get more information on Howard County market trends and home prices).

Next time: How To FIND Good Deals On Homes In Howard County.

JT

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