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Valuing Real Estate

Written by Deborah Bechetti, Spectrum Enterprises

Valuing real estate and any income from that asset can be a bit confusing.  In Maryland, we allow the use of Zillow.com to obtain the fair market value of real estate.  You can also use a copy of the most current assessment, a letter from a realtor, or a current appraisal. If a tax assessment is used be sure to clarify if assessed value equates to market value.

The real estate value will always be the fair market value less any unpaid balance on the mortgage and reasonable costs that would be assessed upon selling the asset.

Example:

Zillow.com real estate value:      $250,000

Mortgage payoff amount:          $167,000

5% Broker fees and selling costs: $1,250

Total value of asset to be shown on the certification: $81,750

 Income earned on a real estate asset is calculated based on the monthly rental payment minus any regular anticipated expenses.  Always attempt to get a copy of the lease.

Example:

Yearly rent: $11,000.00

Mortgage interest paid yearly:  $4,700.00

Taxes paid yearly:  $2,300.00

Homeowner’s insurance yearly:  $800.00

Homeowner’s association fees yearly:  $985.00

Total income from the asset yearly:  $2,215.00

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