Four methods used to find the direction of any real estate market

<<>> The direction and rate of decline is important to find before you buy a home. If you buy your home for top dollars in a declining market and home price are declining at a rate of 10% or over, you may be in for a world of hurt. Appraisers determine the rate of decline via three main methods.

Method 1: The appraiser will pull up all sales in MLS that are similar to your. Next, they will sort the sales over the time of a year or longer. From this data that will compare all of the data from 3 months, 6 months and one year. This will give the appraiser a good idea of the direction of the market for the entire your. This will allow the appraiser to review sales in your area to determine seasonal trends and long term trends.

Method 2: The appraiser will review all of the listings vs. sales in your area to determine how fast homes are selling in your area (absorption rate). This will allow you to see how low it will take to sell your home and at what price point.

Method 3: Each comparable sale that is used to determine your home value will have prior sales history. If most of the sales offer prior sales history, this will give you a good indication of what homes were selling for last year or two years ago and give you a direction of the real estate market.

Method 4: There are several statistical websites on the web and in private multiple listing service data bases (MLS). The Federal Housing Finance Agency offers a database for larger cities that give you the direction of real estate housing for all major cities in the United States. Zillow and Yahoo Real estate provide statistical information on their website.