Napa Valley Valuation BLOG

By Daniel Brauning

The North Bay real estate market is drastically changing. A changing market of tangible assets is always difficult because of the long-term cycle nature of real estate markets. Trying to ‘buy low’ during a down cycle in the market to ‘sell high’ in an increased value market is a matter of patience and timing.

We believe that the financial fundamentals in our country are leading to an increased interest and confidence in real estate by investors. People need to put their money to work in high quality and safe investments but the stock market is highly volatile; investments in bonds are uncertain due to declining asset values; interest rates in Treasuries are near zero and many people are uncertain about banks.

Real estate is the basis for all capital wealth and finding the right property and market timing may be different from one buyer to another. Finding the right property in the right market is always difficult especially in the North Bay market where very few properties are the same. Buying and selling to maximize earnings requires a plan, resources, a network of professionals, perseverance and most importantly; persistence.

With the declining values in the North Bay real estate market and the uncertainty and instability of stock and bond markets, it is a great time to start planning to buy investment properties. There are numerous opportunities to find properties that positively cash flow. To start finding these properties and understanding how to make a property generate a positive revenue stream, first a plan needs to be made.

Contacting your local investment Realtor is a great place to start. A great way to find a Realtor is to look in your local newspaper or periodical, asking for referrals and start making a few calls. Be sure to qualify every person with questions to find your right buying representative. Questions such as:

“How many investors’ have you worked with in the past?”

“What direction have rental rates been trending in the Napa market over the past 6 months?”

”Do you have a referral for a local bank or local mortgage professional to discuss financing?”

“What Rental Property management company would you recommend and why?”

These are basic questions however you need to make sure that the Realtor that you choose to work with is has a good network and can help facilitate the purchase of your investment

With the increased availability of market data from online Automated Valuation Models like www.zillow.com or www.housevalues.com these websites can be good starting points for finding value trends for deciding when to buy and sell. You can even receive our monthly Enewsletter chock full of free market trends and analysis for the Napa Valley markets as well as surrounding market areas.

Finding free data of housing trends and inferring your own conclusions based on the data you find can be difficult. Another step of buying and selling right is understanding regional and national statistical trends and forecasts for thins like employment or industry growth. One place to start is the great website of www.beyourowneconomist.com. Another is www.city-data.com . There are numerous recent and real time data sets and references for national data figures.

When you find a great real estate representative and combine all of your independent market data, regional and nation employment and growth statistics an investor can begin to make educated assumptions regarding real estate investing. A plan on paper with all of the numbers to tackle investing in the declining housing market can become reality. With these tools an investor can create persistence for the best deals and ultimately buy low and sell high.

If you ever need independent and objective market data or trends for a specific property or market area, Brauning Appraisals can provide that information in the format you desire. Just give us a call to see how we can cater to your investment needs.

By Daniel Brauning

The recent boom in real estate value trends led to a variety of online AVMs - Automated (Real Estate) Valuation Models. The most prolific may be www.Zillow.com. There are numerous others and they are a good starting point for market data on a specific piece of real property.

We are often asked; “How accurate are these websites” and our answer is; “We really don’t know”. But they are a good starting point because they do show which properties have recently sold and most now show active listings with photographs.

The problem lies in the algorithms that the site creators use. As a typical end user, we could never decipher the mathematics used to calculate a home value on these websites. Also, we don’t know what data they are basing their calculations. However, it is safe to assume that they use varying public record sources for data. The problem with public record sources is that public records are often incomplete or incorrect and most, if any, report sales concessions nor do they define less than fee simple transactions.

The active listings and recent sales shown in Zillow.com appear to be the most accurate information provided on the website. A valuation number on a house that has not sold for many years may not be very accurate.

Using Cyberspace to get a quick idea of value is a great stating point. However, in these uncertain times, for greater accuracy, an appraisal by a qualified appraiser could save headaches and money.