You know the importance of comps and market trends in price setting. But in today’s market, understanding how property enhancements can change the valuation of a home can lead to a faster sell and greater commission. RPR®’s Realtors Valuation Model® (RVM®,) makes it easy for you to give clients the most accurate valuation possible when preparing to list the property.
- The RVM goes beyond the AVM by adding listing and sales data from the MLS into the equation. Fully-authorized by the MLS, the RVM is able to accurately predict sales prices within a certain margin of error a certain percentage of the time.
- It is the only AVM product owned and operated by members of the National Association of REALTORS®.
- It gives you control and access to adjust the listing content to showcase your skills and expertise as the local real estate expert in your market on a fully-authorized basis.
Ready to try it out? Here’s a few tips to get you up and running with the RVM.
TIP #1: 3 Ways to Refine Value with RPR
There are three ways to refine the value of a property using the RVM. First, double-check and manually adjust (if necessary) the basic facts about the property, i.e., the public record lists two bathrooms but in reality there are three? Did the homeowner add a deck last season? Has the market or home condition changed? You can make these adjustments and see real-time changes in the home’s value as the RVM auto-adjusts to make value changes based on pre-determined calculations for each market.
TIP #2: Gather Information About the Property
Once you’ve updated or confirmed the basic info about the property, gather as much information about home improvements that the homeowner has completed. This is where it gets interesting. You are now able to go back and input all your data, as predefined or custom upgrades to generate a new valuation for the home.
Say we are working with a client who has added an upscale deck, mid-range garage and installed new carpet. Along with each project’s cost and date completed—the RVM allows you to showcase your local knowledge and set yourself apart by adding value to the transaction.
TIP #3: Add Predefined Home Improvements
Start by selecting the type of home improvement. For example, you could choose ‘Deck Addition’ from the drop down menu in the ‘Home Improvements’ section of the ‘Refined Value’ tab of the property you are viewing. Confirm RPR’s description matches yours. By doing so, you are verifying that the improvement meets the standards that the value is based on. Finish up by adding the date completed, total cost, and clicking ‘Add.’ The increased value will be automatically adjusted and added into the refined estimate of the home. RPR is able to do this calculation by utilizing data from Hanley Wood to auto-calculate the value added from the home improvement, based on the date the upgrade was completed.
For the mid-range garage, select it, add the date completed and total cost, add, and we are all set. Repeat the above for any home improvements that meet the predefined description within RPR.
TIP #4: Add Custom Home Improvements
Next we want to add the value of carpet that was replaced a while ago. You might have noticed, but carpet does not appear in the predefined drop down list.
In this case, select ‘Other’ from the drop-down, add in the date completed and total cost, and click ‘Add.’ That will allow RPR to calculate the change in value based on an amortization of the initial cost of the improvement.That’s really all you need to do to add any custom improvement, new driveway, custom dog house, privacy fence, landscaping, ect.
But, let’s back up. When adding total cost to custom improvements, adjust it to what the estimated added value will be for the addition, not just cost of the improvement. With predefined items, the total cost of an improvement does not directly translate into the same value being added to the new refined estimate. For example, if a $20,000 improvement was added, it might only have added $10,000 to the new home estimate.
You might be wondering how you come up with these estimates. Do you just guess? Consult an appraiser if you don’t already. They are experts on benchmark home improvement valuations in your area and can be a great resource for these kinds of valuation adjustments.
Tip #5: Make Market and Home Condition Adjustments
Now that you’ve added all of the home upgrades and adjusted the value, jump down to the last section to make your final adjustments to the RVM based on market and home condition.
Since your homeowner has made all of these improvements, there probably has been some conditional changes to the property. Here’s where you can take those changes into consideration. Is the market is currently slow or hot, interior or exterior is better or worse than comparable properties in the area? You can also make adjustments based on lot size, view, and privacy.
These changes are proportionate to the value of the home. Working with a larger property? Then these adjustments will have a greater impact than on a lesser valued home. Not all changes will affect the value, changes are based off of a variety of factors.
TIP #6: Package and Present to Your Client via an RPR Report
You’ve made your valuation adjustment and are ready to generate a persuasive report showcasing your expert pricing strategy. RPR gives you a few different options for type of report you’ll want to use to present the data. Generate a Seller’s Report and all of the adjustments that you’ve made will be presented with the market and property data and activity. Go a step further and put together a Comp Analysis or Sales Comparison Analysis, where you can directly edit and make adjustments to the RVM, property style, year built, etc. and validate your adjustments by comparing the home to others in your local market. Happy with how everything looks? Confirm, generate, and you’re all set.
Need a refresher? Watch this quick yet helpful video on RPR Reports or learn how to complete a Comp Analysis.
Looking for more information on AVM and RVM? Head on over to RPR’s Knowledge Base for more.