Tuesday, October 2, 2007

My house is worth what?

Over the past few months I have really been in tune with by balance sheet. One key point learned is if I move money from my asset column towards one of my liabilities there is no change in my net worth. The move cancels itself out so to speak. The only time paying down a liability will increase my net worth is when the funds come in from "new" money i.e. my paycheck and never hits the asset column first. (not sure if this is explained well).

So here is my concern. If I move some of my assets from a cash account to do some home improvements, how do I reflect that change in my homes value? I have my homes appraised value listed as the dollar amount under my asset column. I am trying to be conservative with the value of my home. Some of the improvement we would like to make are pretty solid. Things like new vanities and tile floor in the bathrooms should be a good investment. However, what should my change in our House Value be? How do I determine the change in my home's value?

I have spent some time on Trulia and Zillow doing some research on house values in my neighborhood. I have a few known facts to work from because some close neighbors have recently sold. Their homes have sold relatively quickly I might add. My conclusion is that these two websites may be totally inaccurate. Several homes that were listed as sold, to include mine, were listed at the wrong price. My house was listed as being sold for close to the original asking price but not for what we actually bought it for. This is a big deal because my wife and I bought our home for almost $30K less the asking price. We have since put close to $25K in home improvements back into our home.

I am pained by the idea of making what should be a good home improvement but not getting credit for it on my net worth balance sheet. I am considering a few options; 1. Getting my house appraised in a few months. We bought in May and have made major improvements to include new kitchen, flooring throughout, general cleaning, and totally repainted. However, it may be tough for an appraiser to adjust the house value because it has been such a short amount of time. 2. Having my real estate agent come back over and give me her best guess on what equity room I have left in the home.
Thoughts???

3 comments:

Anonymous said...

I enjoy this blog immensely. I'm doing the same thing, but I have a goal to be at 1 million at age 50. I'm currently 41. I currently have a net worth of $403,000. I'm definitely on track!

Anonymous said...

I like it - I'm trying to find some research for my blog of the same nature - you've got a good thing going! Our PF blogs are gaining momentum!

Financial Choices said...

Thanks hank and Anonymous...