Get SEV out of your head

A few years back we Realtors used the SEV number as one of the factors that we looked at to arrive at a homes market value. That was during the days when market values were fairly consistently running between 2.1 to 2.3 times the SEV. Life was good. The market was fairly balanced and stable. The economy was chugging along at a decent, if not spectacular pace, and the local assessors were still a little behind the market in terms of putting a value on homes for tax purposes.

Well, times certainly have changed. The economy, at least in Michigan, has been at best stagnant and at worse going south. Foreclosures are at record highs in the state and we've been in a "Buyers Market" for almost 3 years now. The assessors have not only caught up; they've actually shot right on by the market, which has been actually depreciating over the last 18 months. Yet, many homeowners cling to the old thoughts that a home's value in the market can be calculated by doubling the SEV and then adding a little to that figure.

Unfortunately, the only people who see the homes being worth that much are the assessors and the homeowners. I've just started calculating the current SEV to market value ratio's on sold homes in the market areas that I track - Milford, Highland and Commerce Townships in Oakland County, Michigan - see the Real Estate Statistics page on www.themilfordteam.com or www.movetomilford.com. What I've seeing so far would put the current formula at about 1.6 to 1.7 times SEV for the market value. The current SEV numbers are so off the mark that almost no one in the real estate business uses it to calculate a market value any more. In fact most of us hate to go back in the sold market data more than 3-4 months, because things have been so dynamic in this market. Even appraisals that more than 3-4 months old are useless.

So how can you determine what the market value of your house might be? The best way is to call a local Realtor and have them do a CMA (Comparative Market Analysis) on your home. Unless you really do want them to blow smoke at you to make yourself feel good, make sure to specify to them that you want a realistic price range for your home, based upon the current market. The results may not be what you had in mind; but, the market is what it is. The good news is that you'll also benefit from this market, if you're going to buy another home in Michigan. And, what about the taxes that you're paying on the inflated SEV? That's likely the topic for another post, but I don't feel like going into a rant this morning. Besides, I'm relatively sure that our politicians will find another way to "help us" with this mess. After all, they "helped us" get into it in the first place.