How do most people estimate what their house is worth?
Besides consulting with a licensed real estate agent or appraiser, there is Zillow. Zillow calculates an estimate sale price for each home based on sales in the area, $/sf sold and listed, etc. It sounds like an infallible system, so where is the harm in going holding steadfast to what Zillow says?
Zillow does not take into account the law of diminishing returns, and the present condition of a home.
Lets say your home is 4000 sqft and the rest of homes in the neighborhood are closer to 2000 sqft. You bought the largest home in the neighborhood, you added on some additions, converted the garage and created a beautiful assisted living home with enough space for 10 private bedrooms. You are not going to be getting the same price per square foot as those with smaller homes in the neighborhood. Why?
A sometimes sad but true principal that comes into play is the law of diminishing returns. The largest house in the neighborhood is going to see a slight drop off in price, the larger the gap is between the next largest house and yours will dictate how slight or severe of a drop that is.
Also, Zillow does not have a perfect algorithm yet to consider condition of the home. A brand new home is going to sell at a higher Price per square foot than a home that has deferred maintenance and no recent updates.
The point is use Zillow as it is meant to be used; as a guide or reference but not as the end all be all. In order to get a more accurate picture and comparison of recent sales to determine what your home can sell for, consultation with a professional is a must. Especially in the Residential Assisted living space where you are factoring in the business and real estate combined.
If you want to know what your Residential Assisted Living Home could sell for, give us a call today to get more information on how we evaluate these businesses!